Go to Jeff Salisbury LWGate Home Page.From: "Rob Miller" <rmiller2@carolina.rr.com>
Subject: Re: [CANSLIM] Intro...
Date: Sat, 30 Mar 2002 12:19:42 -0500
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I will sometimes sell before a stock hits my stop if don't like the way things are shaping up. Hard stops are simply a way to define my maximum risk. It's hard to implement a money management strategy if your exits are not defined ahead of time. As for gaps, nothing really protects you, but I have found that it's better to get out on a stop, even if the open is below your stop, rather than exit later in the day or wait for tomorrows open. Most gaps down just lead to lower prices. Sure you might get out higher on a small rally above the open occasionally, but I just find that mentally taxing. As Ed Seykota said in Market Wizards, "Having a quote machine is like having a slot machine on your desk - you end up feeding it all day long." I still use real time quotes, but hard stops keep me from being a gambler. I don't have the mental discipline for it. Rob - ----- Original Message ----- From: "Warren Keuffel" <wkeuffel@xmission.com> To: <canslim@lists.xmission.com> Sent: Saturday, March 30, 2002 11:32 AM Subject: Re: [CANSLIM] Intro... > I think it depends on the personality of the investor and how much time > s/he has to watch the stocks during the day. This latter is particularly > important to me for the first few days after establishing a position > because it is then that I may decide to pull the plug if I don't like > how the chart is shaping up.When I first started CANSLIM investing I > always used hard stops but now I rarely do, and I find that sometimes I > exit a position well before it gets to 8% or wherever your stop (hard or > mental) is set. > > I found that when I used hard stops they don't protect you when your > stock gaps down (as you say) and I am usually close enough to my > computer that I can follow the action at least a couple of times during > the day. I've had enough successes and failures that I can pretty well > tell if a position is taking off the way I want it to. > > YMMV. > Warren > > Rob Miller wrote: > > > 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. > > > > > > - > -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.
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