Re: [CANSLIM] Re: Stop Loss orders

From: "Patrick Wahl" <pjwahl@attbi.com>
Subject: Re: [CANSLIM] Re: Stop Loss orders
Date: Sun, 8 Dec 2002 11:31:38 -0700

Previous Article (by Author): RE: Fundamental Philosophies (was: [CANSLIM] NXTL, SXT) "Katherine Malm"
Top of Thread: [CANSLIM] Re: Stop Loss orders Karen White
Articles sorted by: [Date] [Author] [Subject]

On 8 Dec 2002 at 9:03, Karen White wrote:

> stock was sold and the stock immediately jumped back up to the price it had been
> at.  How does this happen?  Is the stop loss on someones radar and they just go
> get it on the open someway?  But since it takes the stocks trading at that price
> to make it an open order doesnt there have to be another trade at that price?
> 
> Is the fix to never put stop losses on stocks that are more thinly 
> traded?  What would be a good number of shares traded to consider "mental 
> stop losses" rather than putting in the orders.?  This stocks (MVSN) has 
> average daily trading of 702 thousand shares.. That doesnt sound too light to me
> but maybe it is... Is there another answer to do this?  Thanks for all the help.
>  This market is truly frustrating!!! Karen

Concur on the frustrating part.  The market gapped down on Friday at the 
open because of the disappointing Employment report, that is probably 
what shook you out of MVSN.  If your stop was just 1.20 below the 
previous day's close, I would say that is too tight. There is a lot of noise in 
many Nasdaq stocks, and I think to stay in you need a wider stop. 

I've never mastered stop placement, one thought is you put in a very wide 
stop to guard against the calamitous event that really pounds a stock, then 
you make any sell decision based on the end of day price.  That prevents 
you from being stopped out by any intraday noise at least.  

The curious thing about stops, I discovered back when I used to back test 
various trading strategies, is that adding stops to almost any trading 
system will worsen the performance.  That is, if you let some indicator be 
both the signal to enter and exit a position, look at the results, and then 
add stops to the system, the results will almost always be worse than 
without stops.

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.

Go to Jeff Salisbury LWGate Home Page.