Exit Strategies

If you came to this page to learn more about stop losses, you’re in the right place! Check out these short video interviews from the MoneyShow:

Managing Your Exits

Good Stops Hit First

Gaining an Edge with Backtesting

Active Investors (click to continue here)

  • Longer-term horizon of about one-year
  • Don’t want to be shaken out of a position too easily
  • Don’t want to let profits evaporate in the next downturn

Swing Traders (click to continue here)

  • Shorter term horizon of a couple days
  • Need to capture profits quickly
  • Can’t afford to let a loss grow

3 Responses to “Exit Strategies”

  1. Frank Donia | 2/11/10

    Question for the author of “Cutting your losses with stops”. I haven’t tried to duplicate your result in Wealth lab yet.

    But on the face of it, I can’t see how a fixed stop 9% below your purchase price as your only sell trigger would ever lead to a profit. All triggered sales would be at a 9% loss, alternatively you would hold the position indefinitely. What am I missing?

  2. jackieannpatterson | 2/11/10

    The stocks that don’t hit the 9% stop are indeed held to the end of the test period. They will either have gains, or a loss less than 9%. In this way, we can compare the results to buy and hold or other more active strategies.
    Thanks for asking!
    Jackie

    ps. for other readers, the article is here: https://guidance.fidelity.com/viewpoints/trading-stops

  3. peter | 13/03/11

    jackie,
    in you “backtesting the s&p 500 stocks” over the last 5 years you used the buy & hold strategy as reference. you list 500 trades?
    wouldn’t buy & hold be only one trade?
    thanks,
    peter.

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