135

In addition to what others already wrote: Be sure to understand what a STOP-LOSS order really does: it does not stop your loss for sure, but tries to do so. What happens when the stock trades the first time below your stop-loss price is that an order to sell at market price is generated, and your stock is sold with the next transaction (that has enough ...


74

Not a crash, an adjustment. Because of the insane inflation, they have adjusted it periodically by dividing by 1000. Last one was March 2021. https://en.wikipedia.org/wiki/%C3%8Dndice_Burs%C3%A1til_de_Capitalizaci%C3%B3n


44

Generally yes, as can be readily seen from looking at graphs of market indices. I don't think anyone can say with absolute certainty what the reason is, but a good bet is that it's largely due to panic selling. Most people don't seem to be able to hold on during a drop: they want to sell NOW to limit loss, which makes the drop greater, which increases the ...


36

They do so because it’s free advertising. If they get it wildly wrong, it will be totally forgotten —- it’s not news when a prediction fails to come to pass. Unfortunately, it is often considered news when prediction does come to pass, or even comes close. If it is at 3,850 they will be in the news (again) as being amazingly accurate. If it’s 2900 or ...


35

"Always" is an absolute, but history does show that in the long run the (EDIT: US) stock market has gone up. But not continuously up. And in the long run, you're dead. Unless you're really rich, you need to at some point sell some of your assets to get some cash to live. Best hope you're not needing to sell during a down turn.


33

You would end up with cash in your account with the value of 0.7 shares at the time of the reverse split. In other words, your shares would be forcibly sold. Since forward and reverse splits are announced in advance, if you want to prevent your shares from being sold, you would need to buy 3 additional shares before the split so that you'd be left with 1 ...


28

I think you might be misunderstanding what a market and limit order are. To clarify. A market order will be executed at whatever the current price is when the trade happens. So you can't be sure what price you will get, but you can be reasonably certain the transaction will happen. A limit order allows you to put in an order and only exercise it at the price ...


25

So who, and why, actually purchases stocks in the few minutes of an ongoing crash? Other investors who are willing to buy at your price (for reasons unknown). You seem convinced that if you are certain of a downfall and the future is hopeless, then everyone else is too. But some may see it as a value buying opportunity. Perhaps other investors see it as an ...


24

Wall Street was filmed in the late 80's and although Electronic Communication Networks (ECN) existed at that time, their usage was not widespread as they were more the exception than the rule. At that time, the process for buying and selling stock was for a broker to call the exchange whereupon a runner brought the order to the brokerage firm's floor ...


23

Our thinking is that, if there's a long term market crash (e.g. Great Depression) and the value of our index fund plummets, People were having these exact same thoughts 10-11 years ago after the market fell due to the bursted real estate bubble. and we happen to have no job income for years, we'll need money to tide us over. Only making yourselves more ...


22

You don't have to sell just because the price has gone up 25%. You sell... if you need the money... because you think that the company share price will not be growing any more or even it will be going down... because you have found another investment that has more potential... because you want to rebalance your investments... because you have to pay a tax ...


19

For about 100 years or so, stock quotes (symbol, price, volume) were transmitted by telegraph. Many traders of that era were tape readers, often sitting in the office of their broker before phones were in wide usage. This was replaced by electronic communication networks (ECNs) circa 1980. Until about 10 years or so ago, 'open outcry' was the method for ...


18

The odds are on your side but there's no guarantee that "you can totally invest as much as you want at any point in time you want and you can never go wrong." In the US, the market's performance in first ten years of this century is often referred to as the Lost Decade because even with dividends reinvested, the S&P 500 lost a modest amount ...


18

This is closely related to the fragility of things and can easily be observed in times of war: it is much quicker and easier to destroy something than it is to build it. Companies can easily be regulated out of business at the stroke of a pen, found to be fraudulent or run out of cash if credit dries up and so on. These can wipe out huge parts of the value ...


17

First, you're probably not going to get 5:1 leverage in the stock market. In the US, if you're holding the position overnight, you're limited to 2:1 leverage by Reg T. If you are a pattern day trader, you can get intraday leverage of 4:1 but that assumes that you're closing your position at the end of every day. Other countries may will have different ...


17

Suppose we are trading a very illiquid stock of a small company. Some people are trading around a small number of shares for 10€. There are standing sell orders of a volume of maybe 2k oder 3k shares around 10€. They are selling and buying some hundreds of stock. There is another standing sell order for 10k shares at 1000€. You place a buy order for 12k ...


15

If you are skilled enough to know that there is no upturn in sight for the next few minutes then you should be shorting the stock during the drop and racking up nice gains. Collapsing share price (in minutes) and parabolic share price increase (in minutes) can reverse sharply in a heartbeat. In your hypothetical situation where stock XYZ is dropping ...


14

I pulled the DJIA close data, by day, from 1990 to today and calculated the percent change of the market by day. For clarity, I filtered out days where the market moved less than 2% in either direction. I would conclude there are more days of big falls than big rises, but overall the data is fairly symmetric. The skewness of the percent difference is -.16,...


13

A market order basically determines when the order is executed: as fast as possible but the price is unknown. A limit order determines at what price the order is executed: at maximum your limit but the execution time is unknown. Whether a limit order is useful depends a lot on what you are trading. If you are trading a liquid stock during market hours, there ...


12

Besides the publicity angle, there's also the possibility that a company could use these predictions for more direct profit. Consider the following: Buy up lots of stock at $50/share Publish that you predict that stock will get to $70/share Wait for people following your advice to start pushing the stock price up Sell the stock when it gets to $70/share. (...


11

If the stock offers options, there are some strategies that can be used to lock in the much of the gain. Other than that, you don't have much choice. In lieu of that, you could sell 20% of the appreciated position, pulling out 25% of the invested capital but this would only book 5% of the gain. It's not a good solution for anything other than lowering cost ...


11

Your quoted paragraph says it all. The restrictions are intended to mitigate risk for the brokerage firm and for the clients. There's a long history of risk mitigation by the SEC as well as brokers. Some examples: Before the 1929 crash, margin was 10%. You could buy stocks for 10 cents on the dollar. Reg T was subsequently established, requiring that ...


11

The reason they stopped is because Citadel and Melvin capital and others are going to lose to a bunch of Reddit posters and Robinhood traders. People who own the market aren't going to allow that to happen. Like that movie with Eddie Murphy and cornering orange juice, except Eddie Murphy loses in real life cause can't have the little guy winning a rigged ...


11

They say the stock price is determined by what the public is willing to pay for a given security. Yes, the market is an auction. But the public never seems to have the option to raise or lower the price of a stock. No. The fact that the market is an auction means that traders determine the price. If there is more buy volume than sell volume then price ...


10

No, it’s not always true. Suppose, for example, that you had invested in the Russian stock market in 1910. Political risk can permanently destroy your investment.


10

Here's what happens in the U.S. I assume that it's the same where you are and I'll describe it as such. If you place a limit order to buy fewer shares than the size available at the ask price of €30 then you'll buy shares at €30. If you place a limit order to buy more shares than the size available at the ask price of €30 then you'll buy some shares at €...


10

Mutual funds trade differently than stocks. A mutual fund is a collection of small pieces of a lot of different things. The price of a share of a mutual fund is the price of all that stuff. For things like stocks and ETFs you can put in whatever orders you want. If nobody else wants to make up the other side of that transaction then your orders wait until ...


9

I think to get at the heart of the issue, you should realize that if a stock you own has risen, you have already made money whether or not you sell. Your investment returns compound over time, regardless of whether you hold the same stock or switch between different stocks. Every day you continue to hold a stock, it is as if you sold it and then decided to ...


9

During normal trading, the size of rallies and pullbacks are somewhat equal. For Black Swan events, it falls much faster than it rises. For example: From March 9, 2003 to October 16, 2007, a period of 1682 trading days, SPY rallied from $63.85 to $131.31, a gain of 106%. From October 16, 2007 to March 9, 2009, a period of just 510 trading days, SPY gave all ...


8

does the company ever have to pay that money back to the shareholders in any way, or is it essentially free money for the company? You pay back loans, but shares are portions of ownership (and it doesn't make sense to pay back ownership). What the company can do is buy back shares; when this happens, there are fewer shares outstanding.


Only top voted, non community-wiki answers of a minimum length are eligible