Go to Jeff Salisbury LWGate Home Page.From: "Norman" <theboyd@tisd.net>
Subject: Re: [CANSLIM] clarification
Date: Thu, 13 Dec 2001 21:09:43 -0600
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Great K,
I think I understand Mr. B now.
Thx
Norm
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Thursday, December 13, 2001 8:30 PM
Subject: Re: [CANSLIM] clarification
I may be confused with all of our bold and blue and stuff, but I think =
what you're getting at is:
(1) Yes--on a cup w/o a handle the B/O is when the price moves up =
above the left lip of the cup.
(2) 5% failure rate does seem low, but, assuming his scans for the =
formations were robust, the 5% was derived from computerized scans of =
the database. One of the reasons may be that he found most rounding =
bottoms (cups w/o handles) tended to be a consolidation of the =
prevailing trend. So, if you're already heading up, then pause with a =
nice cup, the upside B/O should signal return to trend, in this case, =
up. Certainly, if the failure rate when the price does not B/O of the =
pattern is so high (38%), then it makes sense to wait for the B/O to =
take the trade. Downside? On average, the cup takes 11 months to form. =
Long time to wait for a trade. Another thing he mentions in the =
introduction is that his database is from 91-96. Given that this was a =
bull market, even he says that it could have influenced the statistics. =
As usual, all scientific studies have their bugaboos.
(3) There is no discussion of volume on B/O in this chapter, because =
he is not using WON guidelines to find the formation. (pp.466-476)
Hope I understood your questions this time!
Katherine
----- Original Message -----=20
From: Norman=20
To: canslim@lists.xmission.com=20
Sent: Thursday, December 13, 2001 8:22 PM
Subject: Re: [CANSLIM] clarification
follow up in blue after your comments.
Thx
Norm
----- Original Message -----=20
From: Katherine Malm=20
To: canslim@lists.xmission.com=20
Sent: Thursday, December 13, 2001 7:10 AM
Subject: Re: [CANSLIM] clarification
Norm,
See my notes in bold.
In general, he is trying to match the formation to WON's =
criteria. When looking for the C&H pattern, cups had to have handles of =
at least one week to qualify. Handles had to be in upper half, but there =
were some in the study that were marginally in the upper half and =
included anyway. Cups had to be U shaped. No V shapes were included. =
(Guess he doesn't like drinking his coffee from a funnel.) Price has to =
have risen 30% before the cup was formed. Cup has to take 7 to 65 weeks =
to form.=20
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? Who knows? It's a mystery. But the =
differences were statistically significant.
2) "Failure rate if waited for upside B/O 5%." Is 'upside B/O' =
when it goes above the left side? B/O occurs when it breaks above the =
high of the handle. Actually the 5% failure was in reference to the C =
w/o H breakouts. Does vol play a roll here? I was interested if hi vol =
was studied for a BO above the LS of a cup. He did not include volume =
as criteria for B/O because removing the criteria hurt performance, but =
only slightly. He does give statistics on volume at breakout and after, =
and the volume tends to be very high. Only 5% failure with these C w/o H =
is surprising. And failure is when the price falls back to the pivot? =
No, failure is when the price falls below the pivot and heads down. A =
pullback to the pivot that subsequently moves on is considered a =
"throwback" or pullback, and is not considered a failure.
This chapter alone is worth the price of the book. The ROI makes =
this investment a big winner.
Katherine
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
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<BODY bgColor=3D#ffffff>
<DIV>Great K,</DIV>
<DIV> </DIV>
<DIV>I think I understand Mr. B now.</DIV>
<DIV> </DIV>
<DIV>Thx</DIV>
<DIV> </DIV>
<DIV>Norm</DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, December 13, =
2001 8:30=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM]=20
clarification</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>I may be confused with all of our =
bold and blue=20
and stuff, but I think what you're getting at is:</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>(1) Yes--on a cup w/o a handle the =
B/O is when=20
the price moves up above the left lip of the cup.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>(2) 5% failure rate does seem low, =
but, assuming=20
his scans for the formations were robust, the 5% was derived from =
computerized=20
scans of the database. One of the reasons may be that he found most =
rounding=20
bottoms (cups w/o handles) tended to be a consolidation of the =
prevailing=20
trend. So, if you're already heading up, then pause with a nice cup, =
the=20
upside B/O should signal return to trend, in this case, up. Certainly, =
if the=20
failure rate when the price does not B/O of the pattern is so high =
(38%), then=20
it makes sense to wait for the B/O to take the trade. Downside? On =
average,=20
the cup takes 11 months to form. Long time to wait for a trade. =
Another thing=20
he mentions in the introduction is that his database is from 91-96. =
Given that=20
this was a bull market, even he says that it could have influenced the =
statistics. As usual, all scientific studies have their =
bugaboos.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>(3) There is no discussion =
of volume=20
on B/O in this chapter, because he is not using WON guidelines to find =
the=20
formation. (pp.466-476)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Hope I understood your questions this =
time!</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Katherine</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dtheboyd@tisd.net =
href=3D"mailto:theboyd@tisd.net">Norman</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, December 13, =
2001 8:22=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM]=20
clarification</DIV>
<DIV><BR></DIV>
<DIV>follow up in <FONT color=3D#0000ff>blue </FONT><FONT =
color=3D#000000>after=20
your comments.</FONT></DIV>
<DIV> </DIV>
<DIV>Thx</DIV>
<DIV> </DIV>
<DIV>Norm</DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- =
</DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dkmalm@earthlink.net =
href=3D"mailto:kmalm@earthlink.net">Katherine=20
Malm</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A=20
title=3Dcanslim@lists.xmission.com=20
=
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
=20
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, December =
13, 2001=20
7:10 AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM]=20
clarification</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial"><STRONG>Norm,</STRONG></DIV>
<DIV style=3D"FONT: 10pt arial"><STRONG></STRONG> </DIV>
<DIV style=3D"FONT: 10pt arial"><STRONG>See my notes in=20
bold.</STRONG></DIV>
<DIV style=3D"FONT: 10pt arial"><STRONG></STRONG> </DIV>
<DIV style=3D"FONT: 10pt arial"><STRONG>In general, he is trying =
to match=20
the formation to WON's criteria. When looking for the C&H =
pattern,=20
cups had to have handles of at least one week to qualify. =
Handles had to=20
be in upper half, but there were some in the study that were =
marginally=20
in the upper half and included anyway. Cups had to be U =
shaped. No=20
V shapes were included. (Guess he doesn't like drinking his =
coffee from=20
a funnel.) Price has to have risen 30% before the cup was=20
formed. Cup has to take 7 to 65 weeks to form.</STRONG> =
</DIV>
<DIV style=3D"FONT: 10pt arial"> </DIV>
<DIV>Thanks for relaying the interesting Bulkowski info. =
Mr. B=20
definitely is on my coffee table list. I have a =
'couple'=20
of questions.</DIV>
<DIV> </DIV>
<DIV>1) "<FONT color=3D#0000ff>Cups with higher right lips tend =
to=20
outperform those with a higher left lip." </FONT>Why would =
this=20
be? <STRONG>Who knows? It's a mystery. But the differences were=20
statistically significant.</STRONG></DIV>
<DIV><STRONG></STRONG> </DIV>
<DIV>2) "<FONT color=3D#0000ff>Failure rate if waited for upside =
B/O=20
5%." </FONT>Is 'upside B/O' when it goes above the left =
side?=20
<STRONG>B/O occurs when it breaks above the high of the=20
handle.</STRONG> <FONT color=3D#0000ff>Actually the 5% =
failure was in=20
reference to the C w/o H breakouts.</FONT> Does vol play a =
roll=20
here? <FONT color=3D#0000ff>I was interested if hi =
vol=20
was studied for a BO above the LS of a =
cup.</FONT> =20
<STRONG>He did not include volume as =
criteria for B/O=20
because removing the criteria hurt =
performance, but only=20
slightly.</STRONG> <STRONG>He does give statistics on =
volume at=20
breakout and after, and the volume tends to be very =
high.</STRONG> Only=20
5% failure with these <FONT color=3D#0000ff>C w/o H</FONT> is=20
surprising. And failure is when the price falls back to =
the pivot?=20
<STRONG>No, failure is when the price falls below the pivot and =
heads=20
down. A pullback to the pivot that subsequently moves on is =
considered a=20
"throwback" or pullback, and is not considered a =
failure.</STRONG></DIV>
<DIV><STRONG></STRONG> </DIV>
<DIV><STRONG>This chapter alone is worth the price of the book. =
The ROI=20
makes this investment a big winner.</STRONG></DIV>
<DIV><STRONG></STRONG> </DIV>
<DIV><STRONG>Katherine</STRONG></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </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=20
statistics on C&H and cups<BR>> w/o handles:<BR>> =
<BR>>=20
C&H:<BR>> Failure rate 26%<BR>> Failure rate if waited =
for B/O=20
10%=20
=
<<<<--------------<<<<<<<<<<BR>>=
;=20
Average rise 38%, most likely 10-20%<BR>> Cups with higher =
right lips=20
tend to outperform those with a higher left lip.<BR>> Avg =
gain 40% vs=20
35%.<BR>> <BR>> C w/o H (Rounding Bottoms):<BR>> =
Failure rate=20
38%<BR>> Failure 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>> 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:=20
[CANSLIM] clarification<BR>> <BR>> <BR>> > The 40% =
number is=20
an amalgam of a number of anecdotes from a few different<BR>> =
>=20
sources. Its all word of mouth. No names to given protect the=20
guilty.<BR>> ><BR>> > You can almost infer such a =
number=20
from WON himself...I'd bet if you asked<BR>> > the =
big-O-man in a=20
seminar he'd deflect the question to point out how much<BR>> =
> you=20
are ahead having 1 big gain out of 2-5 trades.<BR>> =
><BR>>=20
><BR>> > ERIC TANGEN<BR>> ><BR>> > =
- -----Original=20
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, 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>>=20
><BR>> > eric, how do you get the 40% reliability of =
the WON=20
breakout? david frank<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 8:57 PM<BR>> > =
Subject:=20
RE: [CANSLIM] clarification<BR>> ><BR>> ><BR>> =
> >=20
Of course you are right...risk is the stop value itself...it is =
what=20
you<BR>> > > loose when your stop is triggered. It is =
what I=20
mean but didn't say<BR>> > > correctly.<BR>> >=20
><BR>> > > This is what happens when I try to =
communicate=20
math verbally...the two<BR>> > don't<BR>> > > =
mix.=20
:)<BR>> > ><BR>> > > ERIC TANGEN<BR>> >=20
><BR>> > ><BR>> > ><BR>> > > =
- -----Original=20
Message-----<BR>> > > From: John Adair=20
[mailto:xjadair@brightok.net]<BR>> > > Sent: Wednesday, =
December 12, 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=20
your post right correctly you would say your risk<BR>> =
>=20
> on a $50<BR>> > > stock with a $5.00 stop would =
be =20
$50.00 -$5.00 or $45.00. If that is<BR>> what<BR>> > =
> you=20
are saying I would not agree I would say your risk is =
$5.00 =20
if I<BR>> > > understand what Tharp suggests. Tharp =
then limits=20
your risk to the 1%<BR>> is<BR>> > > based on =
that=20
figure 1% ( 3% for the gunslinger) of your total =
capitol.<BR>>=20
> > John Adair<BR>> > ><BR>> > > =
- -----Original=20
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=20
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
> > The latter....your risk is your buy price less the =
stop. Rule=20
of thumb:<BR>> > that<BR>> > > number should be =
1% or=20
less of your total trading capital. So if you<BR>> =
want<BR>> >=20
in<BR>> > > on a more volatile stock, just buy less of =
it...but=20
don't set the stop<BR>> at<BR>> > > 7-8% if the =
stock has a=20
10% daily trading range - another point HTMMIS<BR>> > > =
doesn't=20
address.<BR>> > ><BR>> > > Trading any system =
with a=20
7-8% risk for each trade is a receipe for<BR>> > > =
disaster.=20
The pros use a 1% limit. If (as in HTMMIS suggest) you =
split<BR>>=20
up<BR>> > > your capital evenly amoung 5-6 stocks and =
used an=20
arbitrary 7-8% stop<BR>> > loss,<BR>> > > =
statistically,=20
it would be very easy to get enough losing trades to<BR>>=20
loose<BR>> > > all your money. The unspoken 40% =
reliability of=20
the WON breakouts only<BR>> > makes<BR>> > > this =
bad=20
situation worse.<BR>> > ><BR>> > > I'm afraid =
that a=20
quick reading of HTMMIS gives the impression that if<BR>> =
you<BR>>=20
> > can identify the perfect C+H setup and all the other =
CANSLIM=20
criteria<BR>> are<BR>> > in<BR>> > > place, =
you can=20
get darn near 100% reliability of a breakout. I have a<BR>>=20
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=20
run hitters have a lot<BR>> > of<BR>> > >=20
strikeouts.<BR>> > ><BR>> > ><BR>> > =
> ERIC=20
TANGEN<BR>> > ><BR>> > > -----Original=20
Message-----<BR>> > > From: Katherine Malm=20
[mailto:kmalm@earthlink.net]<BR>> > > Sent: Wednesday, =
December=20
12, 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=20
capital<BR>> > > > at risk on any one trade<BR>> =
>=20
><BR>> > > Now that I've been mulling over your =
comment, it=20
begs another question.<BR>> > Are<BR>> > > you =
suggesting=20
the *total* monies invested in a trade are "at risk"? Or<BR>> =
>=20
the<BR>> > > amount which you've specified in downside=20
stop-loss protection as "at<BR>> > > risk."?<BR>> =
>=20
><BR>> > > Katherine<BR>> > ><BR>> >=20
><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 1:46 PM<BR>> =
> >=20
Subject: RE: [CANSLIM] clarification<BR>> > ><BR>> =
>=20
><BR>> > > > Welcome to the club! Breakouts are a =
high=20
risk and high reward<BR>> > strategy -<BR>> > >=20
if<BR>> > > > you're batting .500, that's pretty =
darn good.=20
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=20
new subscribers...WON's<BR>> > 7-8%<BR>> > > > =
stop=20
below the pivot is a technical stop. It is a rule of thumb =
based<BR>>=20
on<BR>> > > > volatility in the handle region before =
a stock=20
takes off.<BR>> > > ><BR>> > > > It is =
NOT A=20
MONEY MANAGEMENT STOP!. If you put 7-8% of your trading<BR>> =
>=20
> capital<BR>> > > > at risk on any one trade, =
you will=20
eventually pay some really serious<BR>> > Wall<BR>> =
> >=20
> Street tuition on the path to becoming successful =
trader.<BR>>=20
> > ><BR>> > > > WON's work has virtually =
nothing=20
in the area of money management (what<BR>> > he<BR>> =
> >=20
> does say is just plain outdated...by 5 stocks with=20
100k...more<BR>> > appropriate<BR>> > > > to =
an era of=20
high commissions and lower volatility).<BR>> > > =
><BR>>=20
> > > Tharp's books are the best (only?) work in this =
area and=20
should be<BR>> > > required<BR>> > > > =
reading=20
before you head out to the great casino that is Wall =
Street.<BR>>=20
> > ><BR>> > > > ERIC TANGEN<BR>> >=20
><BR>> > ><BR>> > ><BR>> > > =
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