For Stock Investors: How To Minimize Loss Risks, Protect Profits And Enjoy Your Vacation Relaxed
What do you do when you invest in stocks for the first time and go on vacation? Many investors are worried like this:
“What happens if prices fall sharply and I can not sell in time because I’m on vacation or just not following the stock market? Do I have to keep an eye on the smartphone stock ticker on the beach, or at least sit in front of the computer at night and track prices to find the right moment to buy or sell a stock? “
Many a private investor, who would like to invest in stocks, can be slowed down by such worries. Many a cautious investor has even before the leave of all stocks separated from his portfolio – for fear that the prices could fall. Many others risk stress with the partner and put the recovery on the line, because they constantly look at the phone to check the courses.
There is a simple solution that you should know at the latest before each trip – but not only then:
Use stop courses!
Each of your securities investments can be provided with a custodian bank (such as the 1822direkt), for example, with a stop-loss order. In other words, if the price of a stock falls short of a limit you specify, the stock is automatically sold. An example makes it clear why such stops can save you the stress and give you a relaxed holiday:
Example: In July you buy the XY share at the price of 100 €. At the beginning of August you want to go on holiday for 14 days. In this time you want to switch off as possible and, if at all, rarely look on the Internet. You also want to forget about the finances and your stocks for a while in order to recover as well as possible. Of course, you do not want to risk major losses in the event that one or more of your shares experience a major setback during your vacation. So set a stop price for the XY stock in your custody account – for example, $ 75. If the price falls below this limit, it will be sold automatically. Your loss is in this example so at a maximum of about 20%. You stay relaxed and do not have to look at stock prices during your vacation.
This technique also works well to ensure a profit that you have already achieved.
Example: Your stock, which you bought for € 100, has developed well and has risen to € 130. Now you want to make sure that you definitely make a profit with this stock investment. For example, set your stop to $ 110. If the price falls again, your stock will automatically sell at € 110 – and you would have hedged your 10% profit.
Also the Trailing Stop Loss, as offered by the 1822direkt, you should look at, to go on vacation with peace of mind. Your stop automatically follows the price increase – but not a price decline. For example, you define that your stock is always sold at 20% below the high. At the purchase price of 100 € your stop is 80 €. If the stock rises to € 150, then your stop then rises to € 120 and so on. If the price then drops from € 150, it will sell when the € 120 mark is reached. Your advantage: To secure a possible profit, without constantly updating even the stop.