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 10:02:30 -0500
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Another set of good answers.

One thing that I am trying to improve on is clearing the laggards from the
portfolio.  If I bought a stock on a good breakout, but three weeks later I
am still only up 5-6%, I have set my stops at break even, but will starting
looking hard for another stock to rotate into on it's breakout.

But of course looking at the price/volume action is critical, because you
could be in a base on base pattern after the breakout.

My 2 cents worth

Mike

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


                                                                                                                            
                    "Don Canfield"                                                                                          
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Good answers.  I apologize if I was a little brief and flippant in my
previous reply, but I believe Tomas made excellent points.   The main point
he made to me was that having a Hard Target is not the objective as much as
having an exit strategy in place before you place the buy order, and basing
that strategy on points Kevin makes (among others) is the right way to go.

I let the market tell me when to get in, and a breakout  on heavy volume is
a great example of this.  I do set percentage stops immediately after the
buy, usually just below recent support, but never more that 8% below entry.
After the stock moves to a 5%ish gain, I begin to move stops up to new
support points, and I left the market take me out.

I wouldn't want to make a hard and fast rule about selling at a patellar
percentage gain, and then watch the stock rise another 100 percentage
points.  No, I'd rather set stops at support and if the stock drops below
that support, consider that the market has taken me out of that stock.

Another factor to consider is risk.  I never invest more that 10% of my
portfolio in a particular buy.  I rarely have more than 10 stocks in the
portfolio. I'm not a shorter (I'm still studying that technique) and I
religiously follow the M considerations of CANSLIM, so I'm out of the
market
when the trend is down. With 10% invested and an 8% stop below purchase, I
never risk more than 1% of my portfolio in any buy.  By raising the stop to
the buy point as quickly as I practically can, I risk nothing at all.

Don

- ----- Original Message -----
From: "Krueger, Kevin" <Kevin.Krueger@cardinal.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, August 27, 2003 10:24 AM
Subject: RE: [CANSLIM] Know your exit before you enter


Great question Tomas and I thought this question would spark more interest
in discussion.

I don't have a great deal of experience on this point, but I have been
researching this topic as I get more disciplined and build a checklist for
trading. I don't have my notes in front of me, but I recall reading (for
long positions):

1. Potential exit points could be resistance points of the past. Certainly,
as you said, one would be a stop loss below your entry point.
2. Identify your target profit. This could be more of a judgment call based
on recent price/volume action and your experience in the market.
3. Calculate your risk/reward ratio. In order to calc. the ratio, you need
a
target price.

I think answering these questions before you execute will add to your body
of knowledge about that potential trade.

- -Kevin

- -----Original Message-----
From: Tomas [mailto:tomas986@yahoo.com]
Sent: Tuesday, August 26, 2003 2:16 PM
To: canslim canslim
Subject: [CANSLIM] Know your exit before you enter


Hi All,

I hear people say this a lot.  They always give advice
saying that you should know when you will exit a stock
when you buy the stock.  For me, I do not have that
mindset.  When I enter into a position, there is the
usually sell rule that I follow (ie... 7% loss, etc).
However, I do not make up my mind at the entry point
to sell at the 20% profit markt.  For me, it all
depends on the price action (and the obvious market
condition).  If the stock is behaving well, I do not
sell it.  If it is not behaving well, I think about
selling it.  I do not have a specific exit point
beforehand.  So, am I missing something here?

Reqgards,
tomas

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