If I had to single out an investors number one dilemma it would be the sell decision.

The decision to buy is much less complicated. All you need is some cash along with a compelling story and youre in the game.

Once youre in the game you have many scenarios to cope with. What to do if the price goes down? What to do if the price goes up? What to do if the price remains unchanged for months?

All these questions are related to admitting a mistake in the event of a falling price, or not being too greedy in the event of a rising price. If the price remains unchanged for months should we move on or wait for the market to discover the value we saw during our buy decision?

Unfortunately, one popular solution being embraced by investors is the stop loss order.

With a stop-loss order, if a stock you own declines to a predetermined price, the stoploss order converts into a market order. This means your broker will sell the shares at the best available price.

On the surface this sell strategy appears to be a logical way to contain risk because the sell is triggered if one of your stocks takes a dive. Profits from a rising stock are also protected if you periodically raise your stop to follow the advance.

Just to reinforce this logical sell strategy a Google search under stop loss order served up an Investopedia item; First of all, the beauty of the stop-loss order is that it costs nothing to implement. Your regular commission is charged only once the stop-loss price has been reached and the stock must be sold. You can think of it as a free insurance policy.

The flash crash in May, 2010 caused investors to expand on the stop-loss order to a stop-loss limit order which specifies the minimum sale price you would accept.

Here are some reasons why investors should never use stop-loss orders:

If you place the sale price limit too close to the stop price, you run the risk of not getting your order filled if the stock price suddenly dives below your sale price limit.

In a recent bulletin the Investment Industry Regulatory Organization of Canada (IIROC) said In a volatile market, a stop-loss limit order may not be executed, in which case the investor will continue to be exposed to a declining stock price,

One example of stop-loss limit orders problems would be the June 3, 2011 collapse Sino-Forest Corp. amid allegations it was a multibillion-dollar fraud.

On Thursday June 2, 2011, shares in Sino Forest dropped 20 per cent to $14.46 following the release of a negative research report by Carson Block of Muddy Waters Research, which made allegations that Sino-Forest had been fraudulently inflating its assets and earnings. The next day on Wednesday June 3, 2011 the share price gapped down at the open to $5 leaving many stop-loss limit orders unexecuted. The company went bust.