Stop-loss orders

Hey community members, I was wondering if it was possible to set stop-loss orders in the bux app? If so, can someone please help explain to me how I can do this, thanks in advance.

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@redizio

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Is this what you mean?

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Well yes and no, the price alerts will be very useful but with a real stop-loss order your stock will be sold when its price dips beneath a predetermined value. Therefore limiting your downside. To my knowledge there is no such option in the Bux app.

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Oh no, they don’t have that, I’m sorry.

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Problem with this reasoning is that you will sell your stocks at the most inopportune time possible (when it’s low).

If your conviction about the companies you buy is strong, why would you ever want to sell them when they temporarily dip?
That temporary dip is actually a signal to buy more of the company, not sell it.

With a stop loss, the only thing you are ever doing is locking in permanent losses to your portfolio. Think about that and try to understand it.

For instance, if you buy Google now at ~2500 USD and you set a stop loss for 2200, the stock hits it an you sell automatically, shortly afterwards the stock goes back up to 2500 again. What you just did is take a 300 loss for no good reason.

Look at the long term charts of the companies you buy, preferably the 5-10 year ones (you can also use google for that) and if it has only gone up in that time, there is a good chance it will go up further from Today in time. If the company has not hit any major problems or is not making less profit every year, there is no need to sell it, if it dips, buy more.

Don’t rack up losses, buy on the dips and rack up profits.

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Well yes but there is one big flaw with your reasoning and that is assuming you buy a stock at a set price and set a stop loss underneath said price. This is of course foolish. A stop loss is normally used to lock in profits on a particular stock. Let me simplify:

You buy stock A at $100 after x amount of time the stock is up 30% and is now worth $130. A smart thing to do would be to set a stop loss at around $115-125 (depending on your age, risk tolerance, etc). This way you can lock in your profits. And I do agree with your reasoning to buy more of a certain stock when its price dips (you are after all convicted to the company because you bought its stock in the first place). But you shouldnt buy the dip in a bear market or during a downwars trend, you only want to buy a stock when there is a reversal pattern.

I dearly recommend the YouTube channel: The Investor Channel

He uses the same aproach and some videos might be able to further explain my reasoning.

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Why wouldn’t you want to buy in a bear market? You never know when a reversal has happened until it’s well underway, so the smart thing to do is average down in increments.

To take profits at a set point, I have to ask: Why?

I do understand it if a company is grossly overvalued and you want to take (some) profits as a precaution. But that is an active action, not a passive one (stop-loss)

Deciding an arbitrary number to take profits seems very odd, as when a company is overvalued is highly dependant on the latest information and numbers as well as future prospects and if your investment thesis has changed.
That is not something you can automate with a stop-loss.

The way you explain it, it seems more like a tool for (shorter term) trading (which Bux X is for and which has a stop loss function) rather then investing.

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Well yes of course stop-loss orders are something you would use when trading stocks in a shorter time frame, or when investing in riskier “growth” and speculative stocks. Whereas your high convictions stocks would be buy and hold investments. However I can’t comment on Bux X as it is not available in my country…I only have acces to Bux zero which I primarily use to make shorter term trades and more speculative investments. My longer term investments are kept with my bank and I dont mind holding those investments over long periods of time. After all speculating on the market is a risky thing and the money I have in my Bux account is money that I dont mind losing. Hope that clarifies things for you :smile:

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Fair enough, that makes a lot of sense! :slight_smile:

It’s very hard to tell someone’s reasons for requests outright, so that is why I went for the educative approach. To prevent potential mistakes that cost money in the long term to investors who do not truly understand the functions they are requesting.

Obviously, you are beyond needing that, hehe.

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Thanks! :smile:
But as you mentioned I think the intention of the devs is for Bux zero to be an investing app where Bux X is a trading platform and thus I expect that Bux zero will never receive such stop-loss order function?

Then all there is left to hope for is that Bux X becomes available in my country soon🤞

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