Re: [CANSLIM] Re: Stop Loss orders

From: Karen White <karenwhite7@charter.net>
Subject: Re: [CANSLIM] Re: Stop Loss orders
Date: Sun, 08 Dec 2002 12:12:36 -0800

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Thank you for the response and the info based  on back testing you 
did.  Perhaps the answer is to put a very wide stop to prevent the calamity 
( - 20%?)  (but then a huge gap is usually followed by a partial fill of 
the gap) and a mental stop to follow some of the canslim suggestions?  In 
the past I have only used stops when I was going on a holiday... but didnt 
have the strength to cut the losses...always would think... hmm, ill wait 
till tomorrow to see if it goes back up.  In this market that doesnt 
work... Maybe I should go back to that and develop some backbone!!! thx, karen


At 11:31 AM 12/8/2002 -0700, you wrote:


>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.
>
>
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