ABSTRACT
Wherever you set your protective stop, it is likely to be touched off at what seems to be the worst possible moment. You will set it at a safe distance under a certain bottom. The stock will break through, catch your stop, and then proceed to build a new bottom at this level for the next rise, or to rally at once and make new highs. No matter. You had your reasons for setting the stop. The stock did not act the way it should have. The situation is not working out according to Hoyle, and certainly not the way you hoped it would. Better to be out of it, even at a loss, rather than face a period of uncertainty and worry. If the stock has started to act badly, you cannot tell how much worse it is going to behave. If you fail to set a stop, you may go on day after day hoping for a rally that never comes, while your stock sinks lower and lower, and eventually you may find (as millions have found) that what started to be a small reaction, and an annoying but trivial loss, has turned out to be a ruinous catastrophe. Stop orders cannot always be placed. In certain cases in active stocks, the exchanges may even restrict the use of stop orders.
