Go to Jeff Salisbury LWGate Home Page.From: "Rob Miller" <rmiller2@carolina.rr.com>
Subject: Re: [CANSLIM] More on Stop Losses...
Date: Fri, 29 Mar 2002 11:40:48 -0500
Next Article (by Author): Re: [CANSLIM] CSTR "Tom Worley"
Previous Article (by Author): Re: [CANSLIM] spreadsheet "Rob Miller"
Top of Thread: [CANSLIM] More on Stop Losses... "Cefaloni, John L Jr. [AMSTA-AR-WEA]"
Articles sorted by: [Date]
[Author]
[Subject]
This is a multi-part message in MIME format.
- ------=_NextPart_000_0016_01C1D716.9266FD80
Content-Type: text/plain;
charset="iso-8859-1"
Content-Transfer-Encoding: quoted-printable
John,
That's also what I do. I specify the percentage of total capital I'm =
willing to risk, say 1%, and buy the number of shares corresponding to =
that amount of risk. So the smaller my position risk (buy price less =
stop price) the more shares I can buy and the greater my potential =
risk/reward. I prefer this over the equal size method called for by =
WON. While I keep my initial losses to less than 8%, as called for by =
WON, I size my positions differently. =20
WON calls for setting an 8% or smaller stop below a correct buy point of =
no more than 5% over your pivot. Using the WON method, you keep your =
losses small, but your (money management) stops are arbitrary with an =
undefined probability of being hit. While this method for setting stops =
doesn't produce significantly different results from WON in most cases, =
combining your initial money management stop with your chart stop does =
improve your chances of success on some stocks. I'm sure many others =
use this method as well. =20
Rob =20
- ----- Original Message -----=20
From: Cefaloni, John L Jr. [AMSTA-AR-WEA]=20
To: 'canslim@lists.xmission.com'=20
Sent: Friday, March 29, 2002 10:02 AM
Subject: [CANSLIM] More on Stop Losses...
Rob,
You make an interesting point here. I also use hard stops and take my =
stop price into consideration when I buy. It is one of the criteria I =
use to determine, based on risk tolerance, how much I'm willing to pay. =
For example, if the b/o price is $30 and the stock is trading at $31, =
but the chart shows support (like 50 dma, an area of consolidation, a =
long term trendline, or some combination) at, say $27, then I will =
likely pass, even though the price is within 5% of b/o, simply because =
setting a stop somewhere below the "safe" price of $27 would mean taking =
on too much risk, i.e., greater than 8% loss if things go south.
John C.
-----Original Message-----
From: Rob Miller [mailto:rmiller2@carolina.rr.com]
Sent: Friday, March 29, 2002 8:42 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Intro...
Welcome JHS,
I have used both methods over the years, but hard stops are all I =
use now. While mental stops would sometimes allow me to miss an =
intraday move below my stop, more often than not you just get out far =
below your mental stop. I also use a risk based money management =
strategy, and hard stops allow me to more precisely define my risk. The =
key is to set your stop at a point where it is unlikely you will be =
stopped out, unless the stock is clearly "broken". WON says that a =
winning stock rarely drops more than 8% below a proper buy point, which =
is in effect the pivot since he says to buy at or only slightly above =
the pivot. No more than 5%. Before I enter a stock, I define my stop =
by looking at the chart and deciding that if the stock hits this point =
then there is clearly something wrong. If your pivot is $30, a stop of =
$29.90 is probably too close, while $28.90 is unlikely if the stock is a =
winner. It all depends on the chart. You can often get out sooner if =
the stock begins pulling back on heavy volume. I try not to buy more =
than 8-9% over my stop because that is where my risk/reward is best. I =
think of my initial risk as the cost to buy the position. I'm not =
willing to spend 15% to buy a position. I continue to use hard stops =
even after I have moved the stop above breakeven (a free position), =
though my stops are far enough away that they are unlikely to get hit =
during a normal reaction. =20
Also, hard stops are less stressful. If, like me, you take only a =
few positions, not knowing your exit can make leaving your computer =
difficult.
Rob =20
----- Original Message -----=20
From: jhs=20
To: canslim@xmission.com=20
Sent: Wednesday, March 27, 2002 9:10 PM
Subject: [CANSLIM] Intro...
I'm another newbie, but have been lurking for sometime observing =
and learning. I am not a Forbes referral, but one from a =
current/long-term member. This has been a terrific site; it is a rare =
board that maintains a sense of dignity as well as being informative. =
Thanks!
I have been investing for several years, but with the assistance =
of a broker. I finally decided to pull the plug because I felt I had =
too little control. It irritated me no end that we never seemed to come =
to some kind of sell rules agreement; hence I rode down more stocks than =
I care to admit. I like the discipline of CANSLIM; for now I intend to =
follow it pretty much to the letter until I get some more experience and =
feel comfortable experimenting a bit.
One question: CANLIM dictates a sell when the price drops 8% =
below purchase cost (with some variation on the exact percentage). Do =
most members write a stop loss order at the same time as the purchase =
order? Or do you simply make a mental note and watch the market? I ask =
this because I have been told that traders have access to the sell =
orders and at times may actually manipulate the prices to the point that =
they can dip down and pick off what is then a comparatively cheap stock.
- ------=_NextPart_000_0016_01C1D716.9266FD80
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 6.00.2715.400" name=3DGENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=3D#ffffff>
<DIV><FONT face=3DArial size=3D2>John,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>That's also what I do. I specify =
the=20
percentage of total capital I'm willing to risk, say 1%, and buy the =
number of=20
shares corresponding to that amount of risk. So the smaller my =
position=20
risk (buy price less stop price) the more shares I can buy and the =
greater my=20
potential risk/reward. I prefer this over the equal size method =
called for=20
by WON. While I keep my initial losses to less than =
8%, as=20
called for by WON, I size my positions differently. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>WON calls for setting an 8% or smaller =
stop below a=20
correct buy point of no more than 5% over your pivot. =
Using the=20
WON method, you keep your losses small, but your (money management) =
stops are arbitrary with an undefined probability of being =
hit. =20
While this method for setting stops doesn't=20
produce significantly different results from WON in most=20
cases, combining your initial money management stop with your =
chart=20
stop does improve your chances of success on some stocks. I'm =
sure=20
many others use this method as well. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Rob =
</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV>----- Original Message ----- </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=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dcefaloni@pica.army.mil =
href=3D"mailto:cefaloni@pica.army.mil">Cefaloni,=20
John L Jr. [AMSTA-AR-WEA]</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> Friday, March 29, 2002 =
10:02=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] More on Stop =
Losses...</DIV>
<DIV><BR></DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff=20
size=3D2>Rob,</FONT></SPAN></DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff size=3D2>You=20
make an interesting point here. I also use hard stops and take =
my stop=20
price into consideration when I buy. It is one of the criteria I =
use to=20
determine, based on risk tolerance, how much I'm willing to pay. =
</FONT></SPAN></DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff size=3D2>For=20
example, if the b/o price is $30 and the stock is trading at $31, but =
the=20
chart shows support (like 50 dma, an area of consolidation, a long =
term=20
trendline, or some combination) at, say $27, then I will likely pass, =
even=20
though the price is within 5% of b/o, simply because setting a stop =
somewhere=20
below the "safe" price of $27 would mean taking on too much risk, =
i.e.,=20
greater than 8% loss if things go south.</FONT></SPAN></DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D810525014-29032002><FONT face=3DArial =
color=3D#0000ff size=3D2>John=20
C.</FONT></SPAN></DIV>
<BLOCKQUOTE dir=3Dltr style=3D"MARGIN-RIGHT: 0px">
<DIV class=3DOutlookMessageHeader dir=3Dltr align=3Dleft><FONT =
face=3DTahoma=20
size=3D2>-----Original Message-----<BR><B>From:</B> Rob Miller=20
[mailto:rmiller2@carolina.rr.com]<BR><B>Sent:</B> Friday, March 29, =
2002=20
8:42 AM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> =
Re:=20
[CANSLIM] Intro...<BR><BR></FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Welcome JHS,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I have used both methods over the =
years, but=20
hard stops are all I use now. While mental stops would =
sometimes allow=20
me to miss an intraday move below my stop, more often than not =
you just=20
get out far below your mental stop. I also use a risk =
based money=20
management strategy, and hard stops allow me to more precisely =
define my=20
risk. The key is to set your stop at a point where it is =
unlikely=20
you will be stopped out, unless the stock is clearly=20
"broken". WON says that a winning stock rarely drops more =
than 8%=20
below a proper buy point, which is in effect the pivot since he says =
to buy=20
at or only slightly above the pivot. No more than 5%. =
Before I=20
enter a stock, I define my stop by looking at the chart and deciding =
that if=20
the stock hits this point then there is clearly something =
wrong. =20
If your pivot is $30, a stop of $29.90 is probably too=20
close, while $28.90 is unlikely if the stock is a =
winner. It=20
all depends on the chart. You can often get out sooner if the=20
stock begins pulling back on heavy volume. I try =
not to=20
buy more than 8-9% over my stop because that is where my =
risk/reward is=20
best. I think of my initial risk as the cost to buy =
the=20
position. I'm not willing to spend 15% to buy a=20
position. I continue to use hard stops even after I have =
moved=20
the stop above breakeven (a free position), though my stops are far=20
enough away that they are unlikely to get hit during a normal=20
reaction. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Also, hard stops are less =
stressful. If,=20
like me, you take only a few positions, not knowing your exit =
can make=20
leaving your computer difficult.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Rob </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=3Djhs@chorus.net href=3D"mailto:jhs@chorus.net">jhs</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@xmission.com=20
href=3D"mailto:canslim@xmission.com">canslim@xmission.com</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Wednesday, March 27, =
2002 9:10=20
PM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] =
Intro...</DIV>
<DIV><BR></DIV>
<DIV><SPAN class=3D00010002-28032002><FONT face=3DArial =
size=3D2>I'm another=20
newbie, but have been lurking for sometime observing and =
learning. I=20
am not a Forbes referral, but one from a current/long-term =
member. =20
This has been a terrific site; it is a rare board that maintains a =
sense=20
of dignity as well as being informative. =
Thanks!</FONT></SPAN></DIV>
<DIV><SPAN class=3D00010002-28032002><FONT face=3DArial=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D00010002-28032002><FONT face=3DArial size=3D2>I =
have been=20
investing for several years, but with the assistance of a =
broker. I=20
finally decided to pull the plug because I felt I had too=20
little control. It irritated me no end that we never =
seemed to=20
come to some kind of sell rules agreement; hence I rode down more =
stocks=20
than I care to admit. I like the discipline of CANSLIM; for =
now I=20
intend to follow it pretty much to the letter until I get some =
more=20
experience and feel comfortable experimenting a =
bit.</FONT></SPAN></DIV>
<DIV><SPAN class=3D00010002-28032002><FONT face=3DArial=20
size=3D2></FONT></SPAN> </DIV>
<DIV><SPAN class=3D00010002-28032002><FONT face=3DArial =
size=3D2>One=20
question: CANLIM dictates a sell when the price drops 8% =
below=20
purchase cost (with some variation on the exact percentage). =
Do most=20
members write a stop loss order at the same time as the purchase=20
order? Or do you simply make a mental note and watch the=20
market? I ask this because I have been told that traders =
have access=20
to the sell orders and at times may actually manipulate the prices =
to the=20
point that they can dip down and pick off what is then a =
comparatively=20
cheap=20
stock.</FONT></SPAN></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></BODY><=
/HTML>
- ------=_NextPart_000_0016_01C1D716.9266FD80--
- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim". Do not use quotes in your email.
Next Article (by Author): Re: [CANSLIM] CSTR "Tom Worley"
Previous Article (by Author): Re: [CANSLIM] spreadsheet "Rob Miller"
Top of Thread: [CANSLIM] More on Stop Losses... "Cefaloni, John L Jr. [AMSTA-AR-WEA]"
Articles sorted by: [Date]
[Author]
[Subject]