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Exit Strategies: How to Choose Your Stops

As discussed in the previous article Stock Exit Strategies: Knowing When to Sell is Important, stop losses are every investor’s safety net against the inherent risks of the stock market. One big loser can eliminate a solid portfolio so protection is crucial. However, not everyone has the time and ability to continuously watch the market. Not everyone has their finger cocked on the trigger ready to sell at all times. The casual investor is often preoccupied with a variety of different things; there is precious little time to monitor the markets from 9:30am to 4pm. But that doesn’t mean you can’t take advantage of stop loss protection.

A dynamic new company called Smart Stops. is gaining a lot of attention lately with their ability to simplify and instruct the casual investor in all things exit strategies.  SmartStops are sell triggers that help you identify when the price of any stock or ETF in your portfolio fall below a threshold that makes them likely to continue falling. SmartStops actively monitors your holdings and alerts you when a sell trigger is activated. SmartStops are calculated each market day using advanced analytics that combine a number of factors including daily market factors, historic trends and an optimal exit strategy. They produce both short-term and long-term exit points to better support varying trading strategies and risk profiles.

Underlying analytics methodology was developed by world-renown exit strategist Chuck Lebeau, SmartStops’ director of analytics. Mr. Lebeau’s groundbreaking research has been adopted to maximize overall returns by many leading players in the investment community. Chuck is a recognized expert in technical analysis who has published books, articles, videos and has lectured to investment conferences throughout the world. He has consulted for global financial institutions like the Bank of China, Citigroup and the Abu Dhabi Investment Authority. Chuck and the other company founders started the company based on recognition that millions of investors need better methods to monitor and protect their stock investments.

Why SmartStops?

SmartStops exit strategies are generated each day to quickly adjust to changing volatility and trend direction. SmartStops allow profits to run, losses to be minimizes and equity to be preserved. After all, maximizing returns is the ultimate goal. SmartStops computer generated algorithms remove guesswork, subjectivity and emotion and replace them with objectivity and logic. SmartStops are also very easy to use and can save you considerable time and effort. While you can easily become attached to your stock holdings, SmartStops’ objective logic helps you get rid of your stocks before the downturn becomes extreme.

How Can I Profit From SmartStops?

The SmartStops system is proven to be one of the most successful trading strategies around. Let’s say you purchased 1,000 shares of S&P 500 ETF SPY in 1998. If you had been using a MACD strategy to determine exits you would have made $1,420 profit over the course of the next 10 years; using an 8% trailing stop strategy would have made you $20,610; if you used a buy and hold strategy you would have profited by $32,860. All those numbers are impressive and profitable. However SmartStops long term stops would have made you $44,600, and SmartStops short term stops would have made you $53,980!

In the downturn of 2008, SmartStops would have literally saved you fortunes. SmartStops alerted traders to get out of Merryl Lynch above $60 (currently at $10.74), Lehman Brothers at $58 (currently bankrupt), Google at $690 (currently at $437), and Fannie Mae at $61 (currently at $0.56). Don’t watch your fortunes collapse around you. Locking in profits and cutting losses can save your portfolio.

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