STOCK MARKET DESK

Taking a loss is not a pleasant task. No one likes to do it at all. If one is to be an active trader it will become necessary to take a loss from to time to time. It is inevitable that the necessity of taking a loss will face the individual trader.If the decision has been made to take the loss, this is not the time to try and get something a little extra to soften the blow. There are novice investors who have decided to take a loss on a stock and at the last minute place a limit sell order just above the current trading range. In most cases, the order is never filled and the stock either just sits there or drops lower. As time passes the numbers of these limits sell orders, just above the current market price, begin to grow in number.

This gathering of limit sell orders creates a phenomenon called overhead supply. Even if good news is forthcoming, the stock will have a difficult time rallying through all of those limit sell orders. It is possible that the overhead supply will begin to drift lower. The members of other traders realize the difficulty of the situation and begin to lower their limit prices. Some of these sell orders are executed and the price is driven even lower. This predicament can become time consuming and frustrating for the trader.

The solution is simple. Once the decision has been made to sell and take the loss it should be done as quickly as possible the money will then be available for purchasing better choices. The market sell order will accomplish this with the greatest speed.