DXNS and stop losses and daylight robbery

Morning all

I would like to hear some views on this. I am perplexed in general about how to place stops and I have become suspicious of how I have suddenyl been 'stopped out' of trades on occcasions when the price suddenly shoots down for no apparent reason in the middle of a nice up trend. I bought myself some DXNS for around 36p or so a week or two ago and as you can see on the chart below it turned out fairly well given that I sold into the big rise on Friday. However I noticed in the course of the day that there was a sudden big fall down to the 50 day MA and then up it went again in less than a minute. Now I didn't have any stops in place which is pretty lucky really because I would have been robbed blind if I had a stop in any meaningful place. I didnt have a stop because this has happened before and I have lost out big time when for no apparent reason down goes the price and up it goes again with some cheeky bugger in a suit seeing loads of stop losses including mine on his screen decides to go on a fishing trip and scoops up loads of other peoples money and makes off with it all.

Am I being paranoid ? Surely I cant be the only person that this happens to. I would very like to know the experiences of others. There is a link to my chart below to illustrate Fridays events


www.dropbox.com/s/dtanjytbrjrj6h7/DIXONS%20RETAIL.png

Boxhead,

The explanation is the SP retraced to fill the gap created on opening the day before: it closed on the 15th at 36.50 and opened on the 16th at 39.00, which created the gap. These are frequent occurrences and usually get filled, hence the movement you observed.
On the subject of stop losses, take a look at the chart.....

....from the low at 25.42 there are clearly 4 swings marked, the low of the 4th swing being at 34.95. Your entry for this trade should be on exceeding the low of the previous day: 36.16 (point 1); personally I would wait until you get a higher low than point 1, hence point 3 would be my choice. The stop loss should be below the 4th swing low at 34.95 (point 2).

ma's and other indicators are magnets to stops just as they are a CCTV camera for the markets. seen it many times.. where the price usually dips just a bit below the ma's before heading off (stop cleaners) - if the trend is up....

most unsuspecting tend to usually put stops in at specific MA's or just below, seems logical but is it ? - so its an easy target to rip n go..

looking at your chart - stops a few pips below (33/34) the breakout point of around 35/36. looks like that move down was successful technical retest of the previous breakout and indeed another breakout of triangle seems to have occurred

wouldn't advise anyone not to use stops and should always be used as part of risk management

best practice is when you enter a trade (you need to know why afterall) .... is to have a price target, price placement of stop and exit strategy.

always bank profit and move stops in when you have some clearance...so if you get stopped , you've banked profit and or you've got stopped out with little or no loss.

all imho.

rgds WS

Thanks a million for these replies guys, that all makes a lot of sense. It seems as if i being paranoid; well to some extent anyway.

Just looks like a gap fill in a strong bull trend to me too. Stops ought to have been below the 30 April low of 34.95p for me as there was a clear symmetrical triangle there. Pity you didn't post that chart before it broke out so we could all have had some of that action!

PS There's some resistance at 47p from the high on the week of 8 May 2009 and a weekly gap down from 50.5p so watch those levels.