Monday, February 28, 2011

Learning experience. Stop Limit lesson.

As I mentioned previously I purchased VXX.  It had gone up a few dollars per share and then stagnated.  I placed a stop limit order because I was greedy and wanted to keep from losing to much if the price plummeted.

I placed the order so that if the price dropped below $31.15 the stock would be sold automatically as long as the price at the time it was sold was higher than $31.00 per share.  I did not want to lose too much if the stock price dropped drastically.

On February 28, 2011 VXX closed at $30.18 per share but my shares were not sold.  The price dropped $1.33 from the close the previous business day.  What happened?  The opening bid and sale on February 28th was below $31.00 per share and never rose above $31.00 per share so my stop limit order was never triggered.

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