Everyone has heard about the collapse in the market last Thursday.\u00c2\u00a0 Magically, the EU decides to create $800 Billion out of thin air to back the countries that are in trouble.\u00c2\u00a0 Spain recently cut their public workers’ compensation by 5%.\u00c2\u00a0 Last week in our webinar on protecting your portfolio<\/a>, we talked about how to hedge your entire portfolio.\u00c2\u00a0 We wanted to do a quick video on why using Stop Loss orders will NOT protect your stocks or your portfolio.\u00c2\u00a0 Stops can be stop limit or stop market.\u00c2\u00a0 They are usually used for downside protection, but can also be used when you short the market.\u00c2\u00a0 Basically they are a way to enter and order at a specified price where you would want to exit if the stock falls below that price. A stop limit is when the price of the stock falls below your trigger price and then an order is entered to sell at a limit price.\u00c2\u00a0 A stop market is after the stock falls below the price you sell at market price.\u00c2\u00a0 When you are in fast market conditions, like last Thursday, there is no guarantee on your price.\u00c2\u00a0 The flury of sell orders and triggers and lack of buyers caused the waterfall effect.\u00c2\u00a0 As we fell through more support areas, more stop orders were triggered.\u00c2\u00a0 This forced many investors to take huge losses on stocks that they have held for years.<\/p>\n Once stop orders pushed through 10,700 they quickly got to 10,500 and when no one was ready to buy at that level the computers took over.\u00c2\u00a0\u00c2\u00a0 Algorithmic trading by the big hedge funds have multiple computer models.\u00c2\u00a0 As momentum picks up some models take over.\u00c2\u00a0 The more momentum the more the computers push.\u00c2\u00a0 The end result was a reversal in a matter of minutes to get back over 600 points on the DJIA.<\/p>\n
![\"Dow](\"http:\/\/www.cheapiv.com\/wp-content\/uploads\/indu5min.jpg\" "\\"indu5min\\"")
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