Method and system for providing downside protection of stock market investments

Abstract

A method and system for providing downside protection of stock market investments. The present invention allows stock prices to be expressed as a stop loss percentage of the high value the stock price attains rather that a fixed or “hard entered” number. The stop loss percentage of the high value allows stock prices the freedom to increase in price while protecting gains that are being made and still providing downside protection for market declines. The system receives security information input from the user and also data link information of current stock information, the system determines new high values and calculates a sell threshold price based on the stop loss percentage and the high value of the security. When the market price is less than the sell threshold price, the system notifies the user or automatically sells the security.

Description

CROSS-REFERENCE TO RELATED APPLICATION[0001]This application is a continuation of prior application Ser. No. 09 / 774,147, filed Jan. 30, 2001.TECHNICAL FIELD[0002]The present invention is related to the Field of investment tracking systems. More specifically, this disclosure presents a method and system for providing downside protection of stock market investments.BACKGROUND OF THE INVENTION[0003]Currently, stop losses for stocks must be “hard entered.”“Hard entered,” describes a fixed value at which the stock will sell. For example, if a person purchases a stock for $100 per share and plans to be out of town for several days, there are limited options to protect the investment from market decline. However, a person might want to sell the stock, for example, if it drops in value to 20 percent of its highest level. The only option currently available is to “hard enter” an $80 (20% drop from $100) stop loss. Yet, if while out of town the stock increases to $150 in price and then begins...

AI Technical Summary

Benefits of technology

Enables flexible protection of gains by automatically selling stocks when they decline by a specified percentage from their highest value, even when investors are not actively monitoring, and adjusts protection levels as the stock price grows, offering both downside and upside protection.

Problems solved by technology

For example, if a person purchases a stock for $100 per share and plans to be out of town for several days, there are limited options to protect the investment from market decline.

Difficulties with the current systems include a failure to provide stop losses to follow the stock up while providing downside protection in case of market decline, a failure to allow protection of gains that could be realized while the investor is unable to “watch” their investment, and a failure to have the “trigger” for selling the stock expressed as a percentage of the purchase price or high value of the stock.

There is also a failure to provide a combination type of protection that would allow for percentage amount protection in a growing market until the percentage increases to a maximum value for the stock at which point the investor or manager desires to changeover to the fixed amount.

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