Go to Jeff Salisbury LWGate Home Page.From: "Norman" <theboyd@tisd.net>
Subject: Re: [CANSLIM] clarification
Date: Thu, 13 Dec 2001 06:39:50 -0600
Previous Article (by Date): RE: [CANSLIM] clarification - Reliability Fanus
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This is a multi-part message in MIME format. - ------=_NextPart_000_0034_01C183A0.F6D673A0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Katherine, Thanks for relaying the interesting Bulkowski info. Mr. B definitely is = on my coffee table list. I have a 'couple' of questions. 1) "Cups with higher right lips tend to outperform those with a higher = left lip." Why would this be? 2) "Failure rate if waited for upside B/O 5%." Is 'upside B/O' when it = goes above the left side? Does vol play a roll here? Only 5% failure = with these is surprising. And failure is when the price falls back to = the pivot? Norm - ----- Original Message -----=20 From: "Katherine Malm" <kmalm@earthlink.net> To: <canslim@lists.xmission.com> Sent: Wednesday, December 12, 2001 10:18 PM Subject: Re: [CANSLIM] clarification > Bulkowski (Encyclopedia of Chart Patterns) gives statistics on C&H and = cups > w/o handles: >=20 > C&H: > Failure rate 26% > Failure rate if waited for B/O 10% <<<<--------------<<<<<<<<< > Average rise 38%, most likely 10-20% > Cups with higher right lips tend to outperform those with a higher = left lip. > Avg gain 40% vs 35%. >=20 > C w/o H (Rounding Bottoms): > Failure rate 38% > Failure rate if waited for upside B/O 5% <<<<---------------<<<<<<<<< > Average rise 54%, most likely 20% >=20 > Nothing on flat bases. >=20 > Katherine > ----- Original Message ----- > From: "Tangen, Eric" <tangene@tycoelectronics.com> > To: <canslim@lists.xmission.com> > Sent: Wednesday, December 12, 2001 9:41 PM > Subject: RE: [CANSLIM] clarification >=20 >=20 > > The 40% number is an amalgam of a number of anecdotes from a few = different > > sources. Its all word of mouth. No names to given protect the = guilty. > > > > You can almost infer such a number from WON himself...I'd bet if you = asked > > the big-O-man in a seminar he'd deflect the question to point out = how much > > you are ahead having 1 big gain out of 2-5 trades. > > > > > > ERIC TANGEN > > > > -----Original Message----- > > From: camelot.homes@charter.net [mailto:camelot.homes@charter.net] > > Sent: Wednesday, December 12, 2001 9:16 PM > > To: canslim@lists.xmission.com > > Subject: Re: [CANSLIM] clarification > > > > > > eric, how do you get the 40% reliability of the WON breakout? david = frank > > ----- Original Message ----- > > From: "Tangen, Eric" <tangene@tycoelectronics.com> > > To: <canslim@lists.xmission.com> > > Sent: Wednesday, December 12, 2001 8:57 PM > > Subject: RE: [CANSLIM] clarification > > > > > > > Of course you are right...risk is the stop value itself...it is = what you > > > loose when your stop is triggered. It is what I mean but didn't = say > > > correctly. > > > > > > This is what happens when I try to communicate math verbally...the = two > > don't > > > mix. :) > > > > > > ERIC TANGEN > > > > > > > > > > > > -----Original Message----- > > > From: John Adair [mailto:xjadair@brightok.net] > > > Sent: Wednesday, December 12, 2001 8:48 PM > > > To: canslim@lists.xmission.com > > > Subject: RE: [CANSLIM] clarification > > > > > > > > > Hi Erick > > > If I am reading your post right correctly you would say your risk > > > on a $50 > > > stock with a $5.00 stop would be $50.00 -$5.00 or $45.00. If that = is > what > > > you are saying I would not agree I would say your risk is $5.00 = if I > > > understand what Tharp suggests. Tharp then limits your risk to = the 1% > is > > > based on that figure 1% ( 3% for the gunslinger) of your total = capitol. > > > John Adair > > > > > > -----Original Message----- > > > From: owner-canslim@lists.xmission.com > > > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tangen, Eric > > > Sent: Wednesday, December 12, 2001 7:19 PM > > > To: 'canslim@lists.xmission.com' > > > Subject: RE: [CANSLIM] clarification > > > > > > The latter....your risk is your buy price less the stop. Rule of = thumb: > > that > > > number should be 1% or less of your total trading capital. So if = you > want > > in > > > on a more volatile stock, just buy less of it...but don't set the = stop > at > > > 7-8% if the stock has a 10% daily trading range - another point = HTMMIS > > > doesn't address. > > > > > > Trading any system with a 7-8% risk for each trade is a receipe = for > > > disaster. The pros use a 1% limit. If (as in HTMMIS suggest) you = split > up > > > your capital evenly amoung 5-6 stocks and used an arbitrary 7-8% = stop > > loss, > > > statistically, it would be very easy to get enough losing trades = to > loose > > > all your money. The unspoken 40% reliability of the WON breakouts = only > > makes > > > this bad situation worse. > > > > > > I'm afraid that a quick reading of HTMMIS gives the impression = that if > you > > > can identify the perfect C+H setup and all the other CANSLIM = criteria > are > > in > > > place, you can get darn near 100% reliability of a breakout. I = have a > big > > > problem with that. > > > > > > I'm not down on CANSLIM...just like people to know the reality of = the > > > situation. Your going for home runs here and home run hitters have = a lot > > of > > > strikeouts. > > > > > > > > > ERIC TANGEN > > > > > > -----Original Message----- > > > From: Katherine Malm [mailto:kmalm@earthlink.net] > > > Sent: Wednesday, December 12, 2001 2:02 PM > > > To: canslim@lists.xmission.com > > > Subject: Re: [CANSLIM] clarification > > > > > > > > > >>If you put 7-8% of your trading capital > > > > at risk on any one trade > > > > > > Now that I've been mulling over your comment, it begs another = question. > > Are > > > you suggesting the *total* monies invested in a trade are "at = risk"? Or > > the > > > amount which you've specified in downside stop-loss protection as = "at > > > risk."? > > > > > > Katherine > > > > > > > > > ----- Original Message ----- > > > From: "Tangen, Eric" <tangene@tycoelectronics.com> > > > To: <canslim@lists.xmission.com> > > > Sent: Wednesday, December 12, 2001 1:46 PM > > > Subject: RE: [CANSLIM] clarification > > > > > > > > > > Welcome to the club! Breakouts are a high risk and high reward > > strategy - > > > if > > > > you're batting .500, that's pretty darn good. You should expect = 40% > > > success > > > > at finding successful breakouts long-term. > > > > > > > > I just have to get this off my chest for the new = subscribers...WON's > > 7-8% > > > > stop below the pivot is a technical stop. It is a rule of thumb = based > on > > > > volatility in the handle region before a stock takes off. > > > > > > > > It is NOT A MONEY MANAGEMENT STOP!. If you put 7-8% of your = trading > > > capital > > > > at risk on any one trade, you will eventually pay some really = serious > > Wall > > > > Street tuition on the path to becoming successful trader. > > > > > > > > WON's work has virtually nothing in the area of money management = (what > > he > > > > does say is just plain outdated...by 5 stocks with 100k...more > > appropriate > > > > to an era of high commissions and lower volatility). > > > > > > > > Tharp's books are the best (only?) work in this area and should = be > > > required > > > > reading before you head out to the great casino that is Wall = Street. > > > > > > > > ERIC TANGEN > > > > > > > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. >=20 >=20 > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. >=20 >=20 >=20 - ------=_NextPart_000_0034_01C183A0.F6D673A0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable <!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <HTML><HEAD> <META http-equiv=3DContent-Type content=3D"text/html; = charset=3Diso-8859-1"> <META content=3D"MSHTML 5.50.4522.1800" name=3DGENERATOR> <STYLE></STYLE> </HEAD> <BODY> <DIV>Katherine,</DIV> <DIV> </DIV> <DIV>Thanks for relaying the interesting Bulkowski info. Mr. B = definitely=20 is on my coffee table list. I have a 'couple' of=20 questions.</DIV> <DIV> </DIV> <DIV>1) "<FONT color=3D#0000ff>Cups with higher right lips tend to = outperform=20 those with a higher left lip." </FONT>Why would this be?</DIV> <DIV> </DIV> <DIV>2) "<FONT color=3D#0000ff>Failure rate if waited for upside B/O = 5%." =20 </FONT>Is 'upside B/O' when it goes above the left side? Does vol = play a=20 roll here? Only 5% failure with these is surprising. And = failure is=20 when the price falls back to the pivot?</DIV> <DIV> </DIV> <DIV>Norm<BR></DIV> <DIV>----- Original Message -----=20 <DIV>From: "Katherine Malm" <<A=20 href=3D"mailto:kmalm@earthlink.net">kmalm@earthlink.net</A>></DIV> <DIV>To: <<A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= ></DIV> <DIV>Sent: Wednesday, December 12, 2001 10:18 PM</DIV> <DIV>Subject: Re: [CANSLIM] clarification</DIV></DIV> <DIV><BR></DIV>> Bulkowski (Encyclopedia of Chart Patterns) gives = statistics=20 on C&H and cups<BR>> w/o handles:<BR>> <BR>> = C&H:<BR>>=20 Failure rate 26%<BR>> Failure rate if waited for B/O 10%=20 <<<<--------------<<<<<<<<<<BR>>= ;=20 Average rise 38%, most likely 10-20%<BR>> Cups with higher right lips = tend to=20 outperform those with a higher left lip.<BR>> Avg gain 40% vs = 35%.<BR>>=20 <BR>> C w/o H (Rounding Bottoms):<BR>> Failure rate 38%<BR>> = Failure=20 rate if waited for upside B/O 5%=20 <<<<---------------<<<<<<<<<<BR>&g= t;=20 Average rise 54%, most likely 20%<BR>> <BR>> Nothing on flat=20 bases.<BR>> <BR>> Katherine<BR>> ----- Original Message = - -----<BR>>=20 From: "Tangen, Eric" <<A=20 href=3D"mailto:tangene@tycoelectronics.com">tangene@tycoelectronics.com</= A>><BR>>=20 To: <<A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= ><BR>>=20 Sent: Wednesday, December 12, 2001 9:41 PM<BR>> Subject: RE: = [CANSLIM]=20 clarification<BR>> <BR>> <BR>> > The 40% number is an = amalgam of a=20 number of anecdotes from a few different<BR>> > sources. Its all = word of=20 mouth. No names to given protect the guilty.<BR>> ><BR>> > = You can=20 almost infer such a number from WON himself...I'd bet if you = asked<BR>> >=20 the big-O-man in a seminar he'd deflect the question to point out how=20 much<BR>> > you are ahead having 1 big gain out of 2-5 = trades.<BR>>=20 ><BR>> ><BR>> > ERIC TANGEN<BR>> ><BR>> >=20 - -----Original Message-----<BR>> > From: <A=20 href=3D"mailto:camelot.homes@charter.net">camelot.homes@charter.net</A>=20 [mailto:camelot.homes@charter.net]<BR>> > Sent: Wednesday, = December 12,=20 2001 9:16 PM<BR>> > To: <A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= <BR>>=20 > Subject: Re: [CANSLIM] clarification<BR>> ><BR>> = ><BR>> >=20 eric, how do you get the 40% reliability of the WON breakout? david=20 frank<BR>> > ----- Original Message -----<BR>> > From: = "Tangen,=20 Eric" <<A=20 href=3D"mailto:tangene@tycoelectronics.com">tangene@tycoelectronics.com</= A>><BR>>=20 > To: <<A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= ><BR>>=20 > Sent: Wednesday, December 12, 2001 8:57 PM<BR>> > Subject: = RE:=20 [CANSLIM] clarification<BR>> ><BR>> ><BR>> > > Of = course=20 you are right...risk is the stop value itself...it is what you<BR>> = > >=20 loose when your stop is triggered. It is what I mean but didn't = say<BR>> >=20 > correctly.<BR>> > ><BR>> > > This is what happens = when I=20 try to communicate math verbally...the two<BR>> > don't<BR>> = > >=20 mix. :)<BR>> > ><BR>> > > ERIC TANGEN<BR>> >=20 ><BR>> > ><BR>> > ><BR>> > > -----Original = Message-----<BR>> > > From: John Adair=20 [mailto:xjadair@brightok.net]<BR>> > > Sent: Wednesday, = December 12,=20 2001 8:48 PM<BR>> > > To: <A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= <BR>>=20 > > Subject: RE: [CANSLIM] clarification<BR>> > ><BR>> = >=20 ><BR>> > > Hi Erick<BR>> > > If I am reading your = post=20 right correctly you would say your risk<BR>> > > on a = $50<BR>>=20 > > stock with a $5.00 stop would be $50.00 -$5.00 or = $45.00. If=20 that is<BR>> what<BR>> > > you are saying I would not = agree I=20 would say your risk is $5.00 if I<BR>> > > understand = what Tharp=20 suggests. Tharp then limits your risk to the 1%<BR>> is<BR>> = >=20 > based on that figure 1% ( 3% for the gunslinger) of your = total =20 capitol.<BR>> > > John Adair<BR>> > ><BR>> > = >=20 - -----Original Message-----<BR>> > > From: <A=20 href=3D"mailto:owner-canslim@lists.xmission.com">owner-canslim@lists.xmis= sion.com</A><BR>>=20 > > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tangen,=20 Eric<BR>> > > Sent: Wednesday, December 12, 2001 7:19 = PM<BR>> >=20 > To: <A=20 href=3D"mailto:'canslim@lists.xmission.com'">'canslim@lists.xmission.com'= </A><BR>>=20 > > Subject: RE: [CANSLIM] clarification<BR>> > ><BR>> = >=20 > The latter....your risk is your buy price less the stop. Rule of=20 thumb:<BR>> > that<BR>> > > number should be 1% or less = of your=20 total trading capital. So if you<BR>> want<BR>> > in<BR>> = > >=20 on a more volatile stock, just buy less of it...but don't set the = stop<BR>>=20 at<BR>> > > 7-8% if the stock has a 10% daily trading range - = another=20 point HTMMIS<BR>> > > doesn't address.<BR>> > = ><BR>> >=20 > Trading any system with a 7-8% risk for each trade is a receipe = for<BR>>=20 > > disaster. The pros use a 1% limit. If (as in HTMMIS suggest) = you=20 split<BR>> up<BR>> > > your capital evenly amoung 5-6 stocks = and=20 used an arbitrary 7-8% stop<BR>> > loss,<BR>> > > = statistically,=20 it would be very easy to get enough losing trades to<BR>> = loose<BR>> >=20 > all your money. The unspoken 40% reliability of the WON breakouts=20 only<BR>> > makes<BR>> > > this bad situation = worse.<BR>> >=20 ><BR>> > > I'm afraid that a quick reading of HTMMIS gives = the=20 impression that if<BR>> you<BR>> > > can identify the = perfect C+H=20 setup and all the other CANSLIM criteria<BR>> are<BR>> > = in<BR>>=20 > > place, you can get darn near 100% reliability of a breakout. I = have=20 a<BR>> big<BR>> > > problem with that.<BR>> > = ><BR>>=20 > > I'm not down on CANSLIM...just like people to know the reality = of=20 the<BR>> > > situation. Your going for home runs here and home = run=20 hitters have a lot<BR>> > of<BR>> > > strikeouts.<BR>> = >=20 ><BR>> > ><BR>> > > ERIC TANGEN<BR>> > = ><BR>>=20 > > -----Original Message-----<BR>> > > From: Katherine = Malm=20 [mailto:kmalm@earthlink.net]<BR>> > > Sent: Wednesday, December = 12,=20 2001 2:02 PM<BR>> > > To: <A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= <BR>>=20 > > Subject: Re: [CANSLIM] clarification<BR>> > ><BR>> = >=20 ><BR>> > > >>If you put 7-8% of your trading = capital<BR>>=20 > > > at risk on any one trade<BR>> > ><BR>> > = > Now=20 that I've been mulling over your comment, it begs another = question.<BR>> >=20 Are<BR>> > > you suggesting the *total* monies invested in a = trade are=20 "at risk"? Or<BR>> > the<BR>> > > amount which you've = specified=20 in downside stop-loss protection as "at<BR>> > > = risk."?<BR>> >=20 ><BR>> > > Katherine<BR>> > ><BR>> > = ><BR>>=20 > > ----- Original Message -----<BR>> > > From: "Tangen, = Eric"=20 <<A=20 href=3D"mailto:tangene@tycoelectronics.com">tangene@tycoelectronics.com</= A>><BR>>=20 > > To: <<A=20 href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>= ><BR>>=20 > > Sent: Wednesday, December 12, 2001 1:46 PM<BR>> > > = Subject:=20 RE: [CANSLIM] clarification<BR>> > ><BR>> > ><BR>> = >=20 > > Welcome to the club! Breakouts are a high risk and high = reward<BR>>=20 > strategy -<BR>> > > if<BR>> > > > you're = batting .500,=20 that's pretty darn good. You should expect 40%<BR>> > > = success<BR>>=20 > > > at finding successful breakouts long-term.<BR>> > = >=20 ><BR>> > > > I just have to get this off my chest for the = new=20 subscribers...WON's<BR>> > 7-8%<BR>> > > > stop below = the=20 pivot is a technical stop. It is a rule of thumb based<BR>> = on<BR>> >=20 > > volatility in the handle region before a stock takes = off.<BR>> >=20 > ><BR>> > > > It is NOT A MONEY MANAGEMENT STOP!. If = you put=20 7-8% of your trading<BR>> > > capital<BR>> > > > at = risk on=20 any one trade, you will eventually pay some really serious<BR>> >=20 Wall<BR>> > > > Street tuition on the path to becoming = successful=20 trader.<BR>> > > ><BR>> > > > WON's work has = virtually=20 nothing in the area of money management (what<BR>> > he<BR>> = > >=20 > does say is just plain outdated...by 5 stocks with = 100k...more<BR>> >=20 appropriate<BR>> > > > to an era of high commissions and = lower=20 volatility).<BR>> > > ><BR>> > > > Tharp's books = are the=20 best (only?) work in this area and should be<BR>> > > = required<BR>>=20 > > > reading before you head out to the great casino that is = Wall=20 Street.<BR>> > > ><BR>> > > > ERIC = TANGEN<BR>> >=20 ><BR>> > ><BR>> > ><BR>> > > -<BR>> = > >=20 - -To subscribe/unsubscribe, email "<A=20 href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 > -In the email body, write "subscribe canslim" or<BR>> > >=20 - -"unsubscribe canslim". Do not use quotes in your email.<BR>> = >=20 ><BR>> > > -<BR>> > > -To subscribe/unsubscribe, = email "<A=20 href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 > -In the email body, write "subscribe canslim" or<BR>> > >=20 - -"unsubscribe canslim". Do not use quotes in your email.<BR>> = >=20 ><BR>> > ><BR>> > > -<BR>> > > -To=20 subscribe/unsubscribe, email "<A=20 href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 > -In the email body, write "subscribe canslim" or<BR>> > >=20 - -"unsubscribe canslim". Do not use quotes in your email.<BR>> = >=20 ><BR>> > > -<BR>> > > -To subscribe/unsubscribe, = email "<A=20 href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 > -In the email body, write "subscribe canslim" or<BR>> > >=20 - -"unsubscribe canslim". Do not use quotes in your email.<BR>>=20 ><BR>> ><BR>> > -<BR>> > -To subscribe/unsubscribe, = email=20 "<A = href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ;=20 > -In the email body, write "subscribe canslim" or<BR>> > = - -"unsubscribe=20 canslim". Do not use quotes in your email.<BR>> ><BR>> = >=20 - -<BR>> > -To subscribe/unsubscribe, email "<A=20 href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; >=20 - -In the email body, write "subscribe canslim" or<BR>> > = - -"unsubscribe=20 canslim". Do not use quotes in your email.<BR>> <BR>> = <BR>>=20 - -<BR>> -To subscribe/unsubscribe, email "<A=20 href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>>= ; -In the=20 email body, write "subscribe canslim" or<BR>> -"unsubscribe = canslim". =20 Do not use quotes in your email.<BR>> <BR>> <BR>> = </BODY></HTML> - ------=_NextPart_000_0034_01C183A0.F6D673A0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email.
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