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Consider Trailing Stop Losses and Buying NYX

NEW YORK ( TheStreet) -- Stocks had a great two-day run after reopening in the aftermath of "Frankenstorm" Sandy. As I write this article on Friday, I'm struck by the fact that we are approaching another critical event.

On Tuesday we in the U.S. will have the most important presidential election since November 2008. The media say the race is too close to call, so all I can say is that uncertainty and some angst may accompany the election's approach and its aftermath.

For those of us who own stocks, it's a prudent time to reexamine our exit strategy (you do have an exit strategy, correct?) and the importance of some kind of a trailing stop-loss system that will alert you when it's time to sell.

In September I wrote an article that speaks to the importance of this system as not only a safety net but as a way to make sure we let "our winners run."

In the article I made the following observations:
Usually, I don't like to enter these "trailing stop-loss orders" as standing orders with the brokerage firm where I trade my portfolio. As I wrote in an article yesterday, "When you enter them with your brokerage firm, the market maker may see your willingness to sell at a price below the current price and conveniently match your order up with some big client who is looking to buy at that price..." In other words, I don't want the market makers to see my stop-loss or trailing stop-loss orders."

That's why I like to use a system that the market-makers can't see, like the new version of TradeStops. It's a system that's been around for years and was recently updated with many helpful new features.

In essence, it's a system designed to keep us invested in our best positions while giving us a discipline to exit ones that are not performing as we'd anticipated. With the potential for increasing stock volatility or unexpected news that can cause a stock to plummet or soar in a "New York minute," we need to keep very close tabs on every stock position that we own.
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NYX $0.00 0.00%
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Chart of I:DJI
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S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

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