Re: [CANSLIM] Know your exit before you enter

From: michael_niemotka@baxter.com
Subject: Re: [CANSLIM] Know your exit before you enter
Date: Wed, 27 Aug 2003 14:02:35 -0500

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I think that is become most important after you have made a 20% plus gain.
At that point, it becomes critical to manage taking profits if the stock
starts to go south, or be of the mind that you will ride out the correction
in hopes of future higher gains.

Personally, it is a lot easier to hit the sell button at a mental stop if I
have told myself going in that I will except nothing lower than a 10% gain
after having been up 20%.  If on the other hand, I think a stock has a lot
of power, then I might be willing to travel down to break even before
pulling out.

The trouble happens (at least for me) when I originally was going to sell
at 10%, but then hold out hope that it will come back, thus breaking the
rule I set going it.





Mike Niemotka , PE
Sr. Principal Engineer
Baxter Healthcare Corporation
Route 120 & Wilson Road
Round Lake, IL 60073
Tel (847) 270-4075
Fax (847) 270-4525
michael_niemotka@baxter.com


                                                                                                                            
                    Ian <ianstm@shaw.ca>                                                                                    
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                    08/27/2003 02:15 PM                                                                                     
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Hi Tomas:

IMHO, identifying a pre-determined profit, and selling a stock
automatically
once it reaches that level, flies in the face of CANSLIM. The whole point
of
listening to the market, and letting the tape tell you which stocks to
trade
(and when) is very reactionary, and falls under the age-old classic mantra
'the trend is your friend'.  Why would anyone arbitrarily sell a breakout
stock after a small 20% profit in a strong bull market? It makes no sense
whatsover.  Given that many stocks are up 400%+ since the market turn on
March 12, you would be defeating the entire purpose of patiently wating for
a confirmed bull market and then riding breakout leaders.

I think that some people confuse this with having a target 'stop' sell in
mind immediately after buying a stock. Making sure you know exactly when
you
will sell if the trade turns against you is essential risk management. But
it isn't something you should do if the trade is working in your favour.

Ian









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