Our Stock State Indicators act as a life-cycle for your stocks. They tell you when the stock is healthy or not doing so well. When your stock isn’t performing well in the market, it will be stopped out with a red SSI. At that time, you might want to consider exiting the trade.
But… what if you don’t want to exit it quite yet? Well, there is a solution for this that will let you keep the stock and stay safe. It’s our Volatility Quotient (VQ) trailing stop.
Let’s look at an example where the VQ could help us.
Our Ralph Lauren (RL) stock has been stopped out for over two years even though we only purchased the stock earlier this year.
How can this be? The SSI looks at how the stock has been performing historically in the market, not just since your entry. So, something that you only recently purchased could potentially be stopped out.
The Volatility Quotient will let you stay in the stock longer if you want to. There are some things to consider first, though, to make an informed decision. The Position Card Page makes this easy.
Accessing the Position Card Page
Log into your account now, and try following along with one of your stopped out positions.
- Click Positions & Alerts from the top black menu
- Make sure you are on the Positions tab. It will have a blue line under it.
- Click the stopped-out position that you might want to stay in longer.
From there, you will be brought to the Position Card Page. This makes analyzing a stopped-out position easier to work with and will give you a visual of how the stock is performing in the market.
Stopped-Out Research
There are three sections to review on the Position Card Page when deciding if you want to keep your stopped-out position. The layout is simple, but it still gives you a great deal of useful information that you can put to work for you immediately.
In the upper left corner, we give you the basic information about your position – the symbol, name, exchange, its SSI, and its VQ.
Try clicking on the SSI and VQ boxes. More data will appear.
The SSI box will tell you exactly when the position was stopped out.
The VQ will tell you when you would be stopped out of the position if you used our Volatility Quotient trailing stop. Remember, the VQ acts as a customized trailing stop for each of your stocks. In this case, RL would need to close below $79.61 for the VQ trailing stop to be triggered and stop you out.
The next section to consider is the upper right corner.
It gives you information about the latest close and some general statistics about how the stock is performing since your entry.
From the photo above, you can see that we have had a gain in RL despite it being stopped out based on the SSI. This could tell us that it might be okay to keep the stock a little while longer. It is, of course, up to you to decide what an acceptable total gain would be for you. Perhaps our $9.09 gain wouldn’t be enough for you. Perhaps it would be.
If you are unsure if this gain is good enough, you might also want to review the general statistics for your stock.
Once you do decide that you would like to keep your stopped-out position, you need to add some protection for the stock. Then, you will know when to get out in the future.
This brings us then to the third section – adding a VQ alert.
The VQ box told us when we would be stopped out if we were to use a VQ trailing stop. The latest close and gains told us how we are performing in this stock. If we are happy with where the VQ would stop us out, we could add the VQ alert.
Below the top two sections, simply click the Alerts tab. Then, click Add Alert.
Another window will display where you can then add the VQ alert. Simply click Trailing Stop (1) from the column of options, and then click the circle (2) to the left of the VQ option (this might already be clicked for you). Finally, click Add Alert (3).
You can click Close (4) once you are done adding alerts.
But I don’t like the VQ stop price
You might be thinking to yourself that you don’t like where the VQ would stop you out. Maybe waiting until RL hits $79.61 is too risky for you. Well, you could simply create your own custom trailing stop for Ralph Lauren.
Instead of clicking the circle to the left of VQ, click the circle to the left of Custom instead. A box will appear where you can type in your own percent.
When you are done entering the percent you want to use, just click Add Alert like you would if you were adding the VQ alert.
Your New Alert
After you add an alert, it will appear in a list under your Alerts tab on the Position Card Page.
By adding the VQ and/or custom trailing stop percent, it lets us hold onto RL for a little while longer. This way, we limit any potential losses while also “un-limiting” our gains. We are not merely staying in RL because we like it or feel loyalty to the stock. We have a mathematical and researched reason for keeping an SSI stopped out stock.
Review Your Red Stocks Today
You might have stocks that are in the red based on our SSI. And… you might want to keep those red stocks for a little while longer. Don’t make your decision just based off gut instinct.
Review how your position has been performing for you since your entry date using the Position Card Page. If you are happy with the results, make sure to put your exit strategy in place. This could be our custom Volatility Quotient or even a trailing stop that you define.
To your investments,
Customer Success Team
