Re: [CANSLIM] Intro...

From: Warren Keuffel <wkeuffel@xmission.com>
Subject: Re: [CANSLIM] Intro...
Date: Sat, 30 Mar 2002 09:32:06 -0700
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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.
>



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