Re: [CANSLIM] clarification

From: "rolf hertenstein" <rolfh@mindspring.com>
Subject: Re: [CANSLIM] clarification
Date: Fri, 14 Dec 2001 14:38:33 -0700
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I too got a bit lost with blues, bolds, etc. And I think I understood the
various responses.  But this still seems to say that a handle-less cup
b/o is safer and has better average returns.  If so, I wonder if the data
really is skewed by the euphoric 90s bull.

 Rolf


> Bulkowski (Encyclopedia of Chart Patterns) gives statistics on C&H and
cups
> w/o handles:
>
> 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%.
>
> C w/o H (Rounding Bottoms):
> Failure rate 38%
> Failure rate if waited for upside B/O 5% <<<<---------------<<<<<<<<<
> Average rise 54%, most likely 20%
>
> Nothing on flat bases.
>
> 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
>
>
> > 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
> > >
> > >
> > >
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