Well, hello everyone. Welcome to Getting Started with Stock Investing. The bell has rung. Another trading week is done, but we' re not quite done our learning for the week. So today in the world of stock investing, what are we going to talk about? We' re going to talk about knowing when to hold them and when to fold them. And specifically we' re on the when to fold them' side of things, when to sell. And I' m a big proponent of no matter what type of trade you' re placing to know when you' re getting out, whether the trade goes for you or against you. And that may sound a little crazy with respect to stock investing, because if you' re doing or intending to own a stock and hold it for a while, how would you know when it might be appropriate to get out?
And that' s the question we' re going to ask. And that' s the question we' re going to ask. So I appreciate so many of you, you know, approaching the weekend. It' s two o' clock here, mountain time in the Salt Lake City area. So it' s four o' clock Eastern if you' re on the East Coast or in the Midwest. So I appreciate you being here. So to Wiley and Sam and Narender and David and Priya and Greg and the rest of the gang, thank you all for being here. I see a lot of familiar names who I affectionately call, you know, the usual suspects. We also have Lee Bull with us. He has decades of experience in the world of investing, knows a ton about all of this stuff.
So if you' re new to all of this, do not think that you don' t want to ask a question because it' s a dumb question. The only poor question is one that you don' t ask. And we all started somewhere and 11 years ago when I found this education, I wouldn' t say I didn' t know a stock from a rock, but I was maybe only one step ahead of that. So, you know, we all start somewhere and so if you' ve got questions, please ask. If you Rewatching this in the archives, you know, you can ask your questions in the comment section down below or just put a comment. If you like the class, I do respond to those on a daily basis.
And also, you consider this your invitation to follow Lee and I in the world of Twitter, now known as X. Lee' s handle is Lee Bohll, C-S-B-O-H-L-B-O-H-L. Oh my God, am I going to have trouble talking? I got 45. Let' s hope I don' t continue to stumble. It' s Lee Bohl, C-S for Charles Schwab and my handle is BarbArmstrongCS. So, you know, lots of great content that you' re missing out on. Another free resource that you can take advantage of. Okay, so let' Get through our important information so that we can get to the topic at hand. Know that everything that we discuss here today is for general information purposes only and should not be construed to be any kind of recommendation.
It' s not a question to trade any particular stock or strategy, you know, or follow any particular type of entry or exit. These are just all ideas. And, you know, we want to emphasize that neither Schwab nor I recommend the use of technical analysis as your only means of investment research, although we will be spending the majority of our time today on the Think or Swim paper money platform. This is the platform that we use. It is for educational purposes only. There are some nuances and differences between the live platform and the paper money platform, but for all intents and purposes, they look like, smell like, feel like the same thing. And it' s a great place for you to be able to learn.
I mean, one of the differences from a stock perspective is that, you know, dividends are not actually paid in a paper money account. They are paid in a live account. But just because a stock pays a dividend doesn' t mean it' s going to continue. So, you know, that' s one of the differences. We are going to demonstrate, because we Re talking about exit today, the use of stop orders and just know that a stop order isn' t a guarantee that you' re going to get out at exactly that price. You know, so we need to be aware of that also. So in this series that is typically taught by Connie Hill, and I don' t have her fabulous red hair, but I' m trying to bring a little brightness into your day, you know, with what I' m doing.
So I' m going to show you what I do have. So I put on a bright green sweater today. So hopefully that helps. So, you know, we start with a conversation about growth and value stocks. We look at the charts. We look at when to get in. So, you know, a trading plan typically has that what to buy, when to buy. Last week, we talked about how much to buy or managing our risk position sizing. And today, we' re talking about when to exit. And so we' re talking about exit signals. And then up next, week, I believe Connie will be back. It' ll be top-down analysis and then timeframes and intrinsic valuations. So today, we are here on week number five.
And specifically, we' re going to look at, you know, what is an exit and why might a trader choose to place an exit? And then we' re going to discover some different methods of setting exit points, okay? And we' re going to do some examples. And I want to look at a couple of examples. So I m going to look at a couple of examples of different things. We' re going to place a brand new trade and put an exit in. In fact, we' re going to do two. We' re going to do one where we' re going to look at the technical analysis and choose a stock price at which to exit. And then we' re going to do one where we' re saying, hey, if the stock goes down more than this percentage from the high, then get me out.
That' s called a trailing stop. The other thing that I' m asked often is, what if I didn' t put a stop on my position and it' s already in my account? How might I add a stop loss order to a current position? And then we' Re going to answer this question of why a trader might apply a technical exit, and that kind of goes along with this idea of know when you' re going to get out before you get in. And if you can make that decision without emotion wrapped around it, like hope or fear, these are the four-letter words that we' re going to use. In the world of trading, having that exit in place can help you make less emotional decisions. So what is an exit point?
So one might look for a change in the company' s fundamentals or if they have a drop in earnings. So we' ve seen a lot of stocks that have both gapped up and gapped down over the last few years, and so we' re going to look for a change in the company' s fundamentals. So we' re going to look for a change in the company' s fundamentals. And so we' re weeks as earnings has come into play. And so one might choose to exit if something like that happens. And there' s both an earnings number that' s part of the earnings announcement and then a revenue number. You might find a stock less appealing if they cut their dividend.
Or there might be some type of news that either makes you want to buy the stock or say, maybe I don' t want to own this company anymore. Or maybe I don' t want to own this company anymore. Or maybe I don' t want to own this company anymore. Or maybe I don' t want to own this company anymore. So there' s all kinds of factors that can go into it. And then others are more technically based. And they' ll just say, like, hey, if I' m looking at the chart and the stock starts to go down, how long do I wait for it to go down before I say enough is enough? And so we can have a target as an exit to get out at a certain profit point.
Or we can have an exit to say, we can also, if a stock was going sideways, and let me just draw a pattern. So if we have a stock that, say, was downtrending, and one of the ones we may look at today might look like this. So the stock was downtrending and it came down and then started to come up and then came down again and came up. This is called a double bottom. Or let' s say it came down, and then came up, and it broke above this line. This would be called a cup and handle pattern. And if we say, well, here it was at 40, and it broke out at 50. If we wanted to put a target in, that, you know, some technicians might say, I think it might eventually go to 60, the width of this pattern.
And so we could put an order in to say we want to buy it right now. And I' ll just change that; the color, that we want to buy it now. And let' s say it' s trading at 51. And then we Re going to do a one cancels the other and say, when it gets to 60, get me out and I' m going to be a happy camper. Or if it drops, say more than 3% below this line, or maybe 5% or whatever number you pick. Or if it goes below 47, get me out, in which case, I' m not going to be happy, but at least I' ve kind of managed the damage. Okay, so, you know, we can we can have an exit for a profit.
And we can also set an exit, you know, to manage our risk, but there is never a guarantee that we' re going to be happy. So, you know, we can have an exit for a profit. And we can also get out at exactly the price we' ve requested, either on the upside or the downside. If it gapped up, we could end up out at 63, in which case, we' d be even happier. You know, and if it gapped down, we could end up out at 45 or lower than that. You know, in which case, it' s like, we' ve got like the double frown going on. Like, hey, I didn' t want that to happen, but it can. Okay, so, you know, we can look at exits in different ways.
And we can put a stop based on different prices, too. So, we could say we just want to have a fixed stop, like if we' re buying here at 74. 50, if it goes 5% below that price, so we' re getting in here at this price, if it goes below this, we want out. Or we might make it 10%. And, you know, we can and it' s just a fixed price. And here, the stock has gone up to 82. And the stop price is still the same. It hasn' t changed. So, we can have a fixed stop. And we' ll do an example of a fixed stop. But if you' re using a fixed stop, what some might do is each week or each month, they might come in and say, okay, I bought it here.
It' s now trading here. So, I' m going to move my stop up to 5% below this price. So, you know, now maybe their stop would be somewhere along here or 10%. And then when it gets up here, they might move their stop up again to 5% below the 82. But they are doing that manually. Yeah. And, you know, somebody is saying, can you have a trailing stop on the upside? And we' re going to do an example of that. And we' re going to show you how that works also. So, I really like your question. You' re kind of setting me up here. So, this is what we call a fixed stop. Now, a trailing stop moves and tracks the price action. So, if we say, hey, you know what?
I' d like to buy this stock. It' s trading at $74. 50. And I' m willing to risk 10%. And so, if it goes below $67. 50, I want to exit. Now, so the stop kind of pulls back. And this trailing stop doesn' t change. It' s based on the high. So, if the price comes down, you know, if it continued to come down, if it came down to $67. 50, you're out. But if the price goes up and we now have a new high of 75. 25, the stop is going to trail up. And then we get another high, 75. 50. It goes up just a smidge. And then it goes up to 78. And the whole way along, the stop is going to trail.
And stay 10% below whatever the new high is. And so, here, you know, we have the same stock. It' s now, you know, up at 82. And so, our stop is somewhere maybe around, you know, 77. Yeah. So, somebody is asking, when you place the stop, can you sell a covered call? What you' d have to do is cancel the stop. And we' re not talking about options in this class. So, but you can cancel the stop, add the covered call, and then you D have to put in a type of stop loss order that would include both the sale of the stock and the buying back of the call. And that' s really beyond the scope of this class. In this class, we only talk about stocks.
But yes, you can, you would have to get rid of the stop. No, you wouldn' t. If you get stopped out of the stock, you' ve got to put in an order that would have you buy back the call at the same time. Otherwise, you' ve got a naked call. But that' s beyond the scope of this class. Okay. So, we' re not going to talk about those here. So, this is a trailing stop. Okay. So, it could be a trailing stop. It kind of moves up as the stock moves up. And it will always, you know, adjust to the highest point. And then if it started coming down from here and came down and hit your exit, well, you' d end up, let' s say if that happened here, you' d end up out at maybe 73 kind of ish.
And so, what it' s doing is it' s trying to eliminate your risk. And then, ultimately, start protecting your profit. So, if here, you know, our stop is at 77, well, that' s above the price we paid to get in at $74. 50. Yeah. Okay. Are there any questions about that? So, when prices aren' t making new highs, the stop level remains the same. So, the stop doesn' t; it only goes up. So, it ll go sideways if the stock is starting to retract. Okay. Okay. Okay. So, the stop only goes up when the stock goes up. The stop. Okay. So, when the prices are moving higher, the stop adjusts itself so that you' re never at any price risking more than 10%. Okay. Okay. So, you guys are a quick group.
Okay. So, when we look at support, we' re going to look at the price of a stock that' s going to rise. So, we' re going to look at the resistance, these can be used as potential exit points. So if we bought the stock when it had come down to a resistance level around here, we might choose to put our stop somewhere below that support level. Or if it broke out above a resistance level and our technical analysis believed that that old ceiling was going to become a new floor, then we might choose to put our stop below this ceiling. Say hey, if it comes back here into this range, I' d rather get out at the top than ride it all the way back down to the bottom.
You know, and depending on what your goal is, some people might say, well when I see this, it' s in a range. When I see it bouncing off support, I' m going to buy the stock here when it bounces. I' ll put my stop loss here so that if it doesn' t hold this support level, I'm out. And then I might put in that OCO type of order and say, ' and then I want to exit when it gets up here.' So we could also put a sell order in here. And so we have two sell orders. And what happens if it comes up and it hits our sell order here, it' ll create a market order and then we' ll get out at the next available price. This order would then be cancelled. It' s one cancels the other. So when one fills, the other cancels. And vice versa. If it hits your stop and it' ll cancel, it' ll sell, you know, cancel this order. Yeah. So, you know, so support I always think of as the floor.
And resistance I always think of as the ceiling. And that' s just how I keep them straight. And so, you know, when we Re buying a stock, we may want to, you know, set this below support. So why did I say resistance? It' s because if it goes up and it comes back and it touches here like it did, some would say, well that was old resistance. It has now become new support, okay? Alrighty. So this is how somebody who is looking at the technicals or looking at the charts might choose to look at it. And we also can see a trend line can act as a support level. And as the stock goes up, we see that the support level goes up. And we' ll go out and we' ll look at examples of this.
And, you know, they say the trend is your friend until it ends. But if you know how to look at the trend and you' re okay with that, you' re saying, okay, here' s my stop, 5% below support. And when it comes down and kisses this support level again, and some might have as part of their trading plan might say, hey, if it closes below this support level, maybe it' s a 30-day moving average. Maybe it' s a horizontal line. If it closes below that, I' m going to move my stop to up to 5% below that support level. So now my stop has gone from 57 to 66. And maybe we bought it when it was trading like right here. So, you know, you know, maybe we bought it at, say, 63.
So now we' Re moving our stop up to not only try and eliminate our risk, but protect some of our profit. And then as it continues to go up, now it went all the way up here and came all the way back down. And we said, okay, we' re okay with that. You know, we' re going to move our stop up, though, because it' s come back to kiss the ring again, kiss that support level. So now we' re going to move it up to 69. And then up it goes. And that' s another way of, you know, using the trend line to determine where you put your stop. Okay. Okay. Yeah. And some will use, you know, a moving average. And we' re going to do an example of that.
You know, where we had this moving average, and on the way up, it was acting as a support. And then it fell out of bed, and it started acting as a ceiling, you know, or resistance. And, you know, for a long position, you may want to set your stop below that moving average line. So in, you know, in that case, if we had set our stop below the 30-day moving average here, we would probably, oops, we had said, well, when it comes down to it, we' re going to move it up to 69. And then up it goes. And then it comes back and kisses that. We' re going to move it. Just a sec. Let me get my tool going again.
So I' m going to move my stop up, and we probably would have been fine. Would have been fine. Then when it came and came below here, if we moved our stop up, depending on whether it was here, we would have been out here. And then, you know, when might you have gotten back in? You might have gotten back in here. You know, when it crossed back above that line. And when would you have gotten out? Probably back around here. So in this case, did you have a gain? Well, from here to here. So that' s not bad. And then if you employed that same rule, would you have had another gain? Well, yeah, a smaller gain, but still adding a little bit to your growth or profit.
And then if you got back in last time, you might have had a gain. And then if you got back in last time, let' Say you got back in here, you would have been out here, you know, or something like that. Now, maybe a little sad that you were down on that, but better off if you' d held it. You know, if you were just doing that long-term buy and hold, well, now, you know, you' re pretty sad because you' ve given back a lot of profit. Does that make sense? And so, you know, this is when that, you know, you' re going to have a gain. And then if you got back in last time, you would know when you' re getting out before you get in.
And then when this happens, you may still like this company and say, ' But I love this company. I believe in what they do.' You know, and I' m saying, yeah, love them. Continue to love them. I' m not saying stop loving them. I' m just saying maybe, you know, some traders might say, I' m going to wait until it crosses back above this moving average, if that' s how I define when I might want to get in. So, you know, it' s been falling now. It' s kind of had a dumpty -dumpty kind of fall. So, you might say, I' m going to let it cross that, make sure it comes back and that it' s not a fake out.
So, maybe we just got back in here and we' ll see how it goes rather than riding it all the way down. And I' m going to show you some examples that will hopefully, you know, be sobering enough to say, hmm, maybe this is a good idea. Do you know what I' m saying? Yeah. Okay. I' m just looking at the notes. Yeah, you can set a trailing stop, you know, based on, you know, any number of things. But let' s go out and look at the charts. So, when I bring this up and, you know, we can see that the market has been uptrending over the last year. And it had a bit of a pullback, but, you know, it was up today. Apple is a kind of a heavy hitter on all the indexes.
And it was up, but there are a lot of stocks that have had a positive reaction on earnings. And if we just do a survey of just today and look at the S &P 500, green means it was up. Red means it was down. And the darker the green, like look at Amgen, it was up 11% today. So, the darker the green, the more it was up. Live Nation Entertainment up 7%. But if we want to see like how many were up versus down, if we come to the index, and we choose the S&P 500, you know, we can see that the majority of stocks were up about 70%, 377 divided by 500. So, 75% of the stocks in this index were up.
It doesn' t mean they' re all uptrending. It just means today they were up. Okay. So, and, and, one of the sectors that has been really strong lately has been utilities. So, I thought we' d go and look at a utility stock. And so, if we look at me, here' s kind of one of these patterns that I was talking about. Do you see this pattern of, and I know we' re talking about exits, but we' re going to do an example trade. So, oops, I think this will show up kind of better. So, this is the cup, and this is the handle. And then it, it, it broke above. And so, how big is this pattern? Well, we found from 47 to 64. So, about $14.
So, if you wanted to put a target on this, what might that target be? Well, you might say, I' m going to put a target here of 78, which is $14 higher than the 64. I' m going to put in a target of 78. Now, when do I want to exit? Well, you might say it broke out from here. Remember, old ceiling might become a new floor. So, what if I put my stop 3% below that number? So, if I took 64. 45, and let' s say you might want to make it 2%, and you might want to make it, you know, 5%. But if we put our stop at 64. 45, we' re going to put our stop at 62. 51. How much are we risking?
Well, we' re risking just over $7 a share. And this account has half a million dollars in it, and we can risk up to $2,500 on any one position. Our other position sizing rule is we don' t want any one position to be more than, you know, $25,000 or 5% of the account. But we could buy 200 shares, we' d be risking about $1,400. So, that would be, you know, within our parameters of acceptability. And you might say, well, it' s kind of moved up quite a bit. You know, do we want to make sure it' s going up? We could do that. Or we could say if, you know, if it comes back down, we' re giving ourselves a bit of grace.
And so, let' s go ahead and put this in as an example of, you know, we' re going to risk about $1 ,400. So, that would be, you know, within our and, you know, and we' re defining our risk. Now, is there any guarantee that we would get out at exactly that price? There is not. If it were to gap down, we could end up out at a lower price. But I' m just going to give you an example of how we might put that order in. So, we' re going to come to the trade tab. We are going to right click anywhere on this line. And we want to buy custom with an OCO bracket, which means, you know, we' re going to put that order in.
So, we' re going to; we know both what our target is and our stop. And so, our target is going to be that $78. I think it was $78, wasn' t it? $14 . 64, $78. Our target is going to be $78. And our exit is going to be $62 . 51. So, we' re risking about $7 . 50. $62 . 51. We' re risking, you know, about $7 . 50 for the opportunity to make $8. And we' re going to make these good till canceled. And we' re going to send this in. Now, it After the market closed. And so, this order, if it doesn' t fill on Monday, it would expire. Okay. So, we' re going to send that in.
Oh, and we' re going to do 200 shares. So, if you hit this little clip, actually, it looks like a firecracker and turns into a paper clip, it will make these match. Confirm and send. And the position size, $14,000. We want to buy 200 shares of KNE, which is an electrical utility at $70. 12. We want to exit when it goes up by $7. 88 or if it goes down by $7. 61. Okay. So, we' re going to hit. We' re going to do this. Now, this is a utility stock. So, when we look at this, this does pay a dividend of 2.94%. And it is in the value category. I' m not surprising for a utility to pay a dividend.
And of course, there' s no guarantee that dividends will be paid in the future. But we could put this in our group labeled stocks with dividends. We could also, you know, if we had a stock with a target, we have a target on this. So, we could put that in that group too. And, you know, you can put it in either one. So, we' re going to send that in. And we aren' t going to hear a ping because the market is now closed. I want to show you a stock, an example of, well, what do we do if a stock doesn' t have a stop? And either this doesn' t have a stop because there' So no dividend. Or if there' s no dividend, we' re going to put it in the stock.
So, there' s no little chiclet beside it. Or the stop loss order is in the wrong place. So, to make sure there is no stop currently on this stock, we are going to come up to our working orders. And if you click symbol, it will sort. It will sort alphabetically. So, AMD, it should be the second position. So, we have no stop loss in place. And so, if you' re saying, well, maybe a stop loss would be a good idea. I am going to come out and look at this chart on AMD.
And I' m going to add a stop. And so if we look at AMD, you know, we didn' t have a stop on this. This isn' t an account that I actively manage. I just kind of have some things in there so I can use them as learning experiences for us when I teach a class. But this has kind of come down. And today it looks like it' s breaking above this diagonal line. But, you know, it was at 227. It' s come back to $150. So like, you know, we own 178 shares of this and we' ve given back $77 of profit per share. All I can say is, ouch, it' s 178 shares.
178 shares times $77 a share. That' s $13,000. Don' t you wish we' d had this conversation earlier? Yeah. But we are where we are. And so might we just look at this and say, hey, you know, I' m going to do this. I' m going to do this. I' m going to do this. I' m going to do this. Know what, here' s our recent low on this is 141. 16. If it goes 2% below that, I' m out. So 142. 16 times 0. 98, that would give us 2%. That' s an example of exiting at 2% below a recent low. That would be 139. 32. So we' re going to come back up to the monitor tab. We paid 139. 10 for this. So we' d be getting out and just breaking even. We' re still up 8% on this. But we' re going to look at this and say we want to create a closing order to sell with a stop. And of course, there' s no guarantee that we' d get out at exactly this price if it were to gap down. 139. 32. 139.32.
And so now we have added a stop loss order. Again, no guarantee that we would get out at exactly that price. But we' re saying, okay, we' re trying to manage the position. Now, we bought this here at this, on this date. So we' re going to look at this and say, okay, we' re going to buy this here. And our rule was, if it comes down and closes below, this red line is the 30-day moving average. Our guideline is we' re going to move our stop up to 3% below the low of that day. So our first stop, and I went in and I wrote these things out ahead of time so we could just, you know, get the message without having to do all the math in the class.
So our first stop would be here around 122. And, you know, if you' re, you may have wanted to move this up a little bit here. But for sure, here, it came and closed below the 30-day moving average. And so on that day, you know, this would have maybe been 127. And then when we got up to here, when it closed below, that would have been 157. And then when we got up here, we got up as high as 227. This was just on this one day. I mean, it ended up closing lower. But when it came and closed below here, this, we would have, our stop would have been moved up to 172. And we would have been out a few days later.
And if your rule was, ' I' m going to get back in when the uptrend continues, would we be back in yet? We would not. Would we have gotten out at the top? We would not. But you don' t have to get out at the top to necessarily still be able to be profitable. It may hurt a little bit to have given this kind of level of profit back. But what price did we buy the stock at? Well, let' s look at that. We bought the stock at $130. So we would have still made, if we got out at 172, we still would have made $32. It was $32. 90 is what it turned out to be. So that was it.
We still would have been out with a 24% gain, which is pretty good. And we may still love AMD. But are we back? Yeah. As an owner of AMD? Well, if our rule is we want it to cross at least this diagonal support line and maybe come back and bounce and show that it was maybe it' s going to set up a double bottom here and then break. But if we don' t have an entry, then that' s a topic for another day. But we would still be out of this position had we employed that rule. Okay. Okay. So somebody' s asking, you know, what about a stock that is more volatile that can move around a lot?
Well, if we were to look at a stock like, okay, so let' s not look at, you know, a utility or, you know, they don' t tend to go down so much. So Costco, well, and this is actually considered, it' Considered to be a staple. You know, we do buy a lot of staples at stores like Costco; toilet paper, you know, if you' ve got multiple bathrooms, because you buy it, you know, in just such huge packaging. But if we said we wanted to buy this, and we said, we' ve got earnings coming up. And you know, we' ve seen a lot of stocks gap both up and down. So might I introduce you to a Starbucks, which gapped down; IBM, which gapped down; CVS, which gapped down, but then you may say, okay, I' m ready, go hide the knives, you know.
But then you have stocks that gapped up to like Tesla, gapped up; Triple M, gapped up on earnings; Google, gapped up. And Google is a stock. So maybe we use Google as our example, because this is another stock that, you know, it can move fairly quickly, in either direction. And you might say, well, it gapped up on earnings. And then it came back, which is not uncommon. And it' s now moving to the upside again. And you might say, like, hey, $160. 52. If I look at that, and I travel a lot, so I don' t want to have to be going in and updating my stops all the time. You know, that stop, if we put it 3% below there would be around 155.
So you might say, well, what is that as a percentage of 167? So if you say $167. 24 is my price, let me bring a calculator up here. If I was risking, if it was 155, so that' s about $12 a share. So if I take $12 and I divide that by my entry price, and that' s about 7%. So you might say, hey, if this stock goes down more than 7%, I want to exit the position. Now, has it done that recently? Here' s a quick way to measure. So here, yeah, that actually was 7%. Wow. That was 5%. What was this? That was 9%. So you' re going to get whipped in and out more. You would have been out here 12%.
But if you say, well, I see this as maybe continuing to go up. So you may say, well, I want to stay in. I' d like to do a trailing stop, maybe not at 7%, which would have knocked me out here. Maybe make it 10%. I mean, you can do it however you like. I like your slip. Toilet paper rolls there. Okay. So let' s look at adding a trailing stop. So we' re going to come to the trade tab. We' re going to buy a hundred shares of Google and we aren' t going to put a target on it. As long as it doesn' t fall by more than 10%, we' d like to keep owning it.
And then we' re going to come down to our stop and we are going to make it a trailing stop based on not a number. You could make it a number based on the ATR or whatever you want, average true range, but we' re just going to say, hey, if this goes down by more than 10% from whatever the high is, then get us out. Well, it So, got to be a negative, negative 10%. Okay. And we' re going to make that good till canceled. And then when I come to confirm and send, it says, okay, we want to buy a hundred shares of Google, current price $167. 08. And we want to sell it if it goes down by more than 10%.
And so as long as it goes up, like I described earlier, when it hits a new high, it will adjust that stop. And then if it pulls back, the stop won' t go low. So we' re going to make that good till canceled. And then when I come to confirm and send, it will only move up as it hits new highs. And so that way we' re never going to give back more than 10% of our gain. But the most risk is when we first get in, because we could lose 10% of this position. So we could be down by $1,670. And this triggers a market order to sell. So if it gapped down, we could be down more than that. Okay.
So we' re going to put this in our trend trading growth stock bucket, and we have that trailing stop in place. Now, I know it' s about time to wrap things up, but I want to show you what can happen. And I saved this special just for you on a Friday afternoon. It' s called Roku. And Roku, I put this in the hall of shame, and I was going to close this out. Like when it was down $3,000, I' m just going to leave this now, because we can use this as a learning tool, but it' s hitting my numbers, which I don' t like. So here we paid $108 a share for this stock, and it' s currently trading at $59. 16.
We' re down almost $10,000 on this. We' re down 45%. And you may say, how could you let that happen? Well, it' s easy. You move it to a place you don' t have to look at it every day. And then denial is not just a river, you know, in South America. You know, denial, I don' t even think it' s in South America. But it' s not just a river, it' s a trading strategy. And it' s often not a very effective trading strategy. So if we come and we look at the chart on Roku, just to kind of hit home, the power of putting in a stop. So we bought it here.
And you know, if we look at the longer- term chart, it had kind of one of these consolidating patterns, and then it broke out, we bought it, and then it started to fall. Well, if our stop had been placed, that original stop, and I put it here on the chart, if it had been placed 3% below, it would have been placed at $94. 67. And we would have been out on this day, on December 18. And instead, what happened is it continued to fall. And then it' s like, oh, it bounced. Oh, we' So grateful for that bounce, it came up almost, you know, we we kind of got back a lot of our losses, it came back to like, what, what was our high that day, $98.
80, almost $100. And so we' re hoping we have this little inverted head and shoulders pattern, we' re hoping it' s all going to work out. And then earnings happened. And like it took a nosedive. And you know, and now it' s come down here. And so we may be using that four- letter word again, hope to say, well, we' re hoping this support level is going to hold. And you know, when you look at stocks like Peloton, you know, and you look at a longer- term chart, you know, if you bought up here, this thing went down to $3 and 40, close at $34.30. And so it behooves you to make a decision in the cold, hard light of day, you know, when you aren' t going to let your emotions get the best of you.
So now if we, you know, we say, well, okay, head now officially out of the sand, it could have been worse, like look at Roku, it was up at $500 a share, and now it' s at 59. So, you know, what would we do now? Well, you might say I see this 55 as a support level, I' m going to go in, and I' m going to stop the hemorrhaging. If it goes below that $55 level, I' m going to exit the position. So we' re out of time, I' ll put that stop in after the class. But I appreciate you joining me today. And I' ll see you next time. Bye. I think we' ve covered what we set out to cover. Have a really, whoops, sorry, guys, have a really great weekend. Get out there and hug someone you love. We looked at our examples, we discussed different ways to put in a stop. And and just remember, hope is not a good exit strategy. Thanks to Lee for hanging out in the chat, hit the like, hit the subscribe. And don' t forget to follow us on Twitter. That' s a wrap, guys. Have a great weekend.
