Go to Jeff Salisbury LWGate Home Page.From: "Cefaloni, John L Jr. [AMSTA-AR-WEA]" <cefaloni@pica.army.mil>
Subject: [CANSLIM] More on Stop Losses...
Date: Fri, 29 Mar 2002 10:02:26 -0500
Next Article (by Subject): Re: [CANSLIM] More on Stop Losses... "Rob Miller"
Previous Article (by Subject): [CANSLIM] MGAM "Leo Antons"
Next in Thread: Re: [CANSLIM] More on Stop Losses... "Rob Miller"
Articles sorted by: [Date]
[Author]
[Subject]
This message is in MIME format. Since your mail reader does not understand
this format, some or all of this message may not be legible.
- ------_=_NextPart_001_01C1D732.BD02D2A0
Content-Type: text/plain;
charset="iso-8859-1"
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.
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
- ----- Original Message -----
From: jhs <mailto:jhs@chorus.net>
To: canslim@xmission.com <mailto:canslim@xmission.com>
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_001_01C1D732.BD02D2A0
Content-Type: text/html;
charset="iso-8859-1"
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META HTTP-EQUIV="Content-Type" CONTENT="text/html; charset=iso-8859-1">
<META content="MSHTML 5.50.4522.1800" name=GENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff
size=2>Rob,</FONT></SPAN></DIV>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff size=2>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.
</FONT></SPAN></DIV>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff size=2>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.</FONT></SPAN></DIV>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=810525014-29032002><FONT face=Arial color=#0000ff size=2>John
C.</FONT></SPAN></DIV>
<BLOCKQUOTE dir=ltr style="MARGIN-RIGHT: 0px">
<DIV class=OutlookMessageHeader dir=ltr align=left><FONT face=Tahoma
size=2>-----Original Message-----<BR><B>From:</B> Rob Miller
[mailto:rmiller2@carolina.rr.com]<BR><B>Sent:</B> Friday, March 29, 2002 8:42
AM<BR><B>To:</B> canslim@lists.xmission.com<BR><B>Subject:</B> Re: [CANSLIM]
Intro...<BR><BR></FONT></DIV>
<DIV><FONT face=Arial size=2>Welcome JHS,</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>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. </FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>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.</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2>Rob </FONT></DIV>
<BLOCKQUOTE dir=ltr
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A title=jhs@chorus.net href="mailto:jhs@chorus.net">jhs</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A title=canslim@xmission.com
href="mailto:canslim@xmission.com">canslim@xmission.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, March 27, 2002 9:10
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Intro...</DIV>
<DIV><BR></DIV>
<DIV><SPAN class=00010002-28032002><FONT face=Arial size=2>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!</FONT></SPAN></DIV>
<DIV><SPAN class=00010002-28032002><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=00010002-28032002><FONT face=Arial size=2>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.</FONT></SPAN></DIV>
<DIV><SPAN class=00010002-28032002><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=00010002-28032002><FONT face=Arial size=2>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.</FONT></SPAN></DIV></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
- ------_=_NextPart_001_01C1D732.BD02D2A0--
- -
- -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 Subject): Re: [CANSLIM] More on Stop Losses... "Rob Miller"
Previous Article (by Subject): [CANSLIM] MGAM "Leo Antons"
Next in Thread: Re: [CANSLIM] More on Stop Losses... "Rob Miller"
Articles sorted by: [Date]
[Author]
[Subject]