Re: Re: [CANSLIM] Stop losses and DHI

From: Bill Triffet <btriffet@earthlink.net>
Subject: Re: Re: [CANSLIM] Stop losses and DHI
Date: Mon, 9 Jun 2003 11:16:18 -0700 (PDT)
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Tomas,
To this day the main rule I've never disagreed with WON has been "preservation of capital". " Live to trade another day" is the way to go.

Appling a trailing stop after you've made some gains may knock you out of the stock. Maybe it continues on up after that. Maybe not. The point is you live to trade another day. 

Maybe give yourself more wiggle room if a stock is ramping up quickly and you've made some gains. Example: 7% stop-loss right after your purchace then slide it up to just at or above the pivot after you've made say 10-12%. This is a very subjective thing but for me it satisfies two rules. 
1. Sell at 7% loss - no matter what.
2. Don't let a profit turn into a loss 

You didn't say when/where you bought DHI. How tight was your stop?

I have to agree with Mike that unless your doing thinly traded stocks or are making some LARGE block trades your trades are under the "big guys" radar screens. I recall WON mentioning the phenomina at one of his seminars but he does much larger trades than me...

- --
Bill

- -------Original Message-------
From: Tomas <tomas986@yahoo.com>
Sent: 06/09/03 10:40 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Stop losses and DHI

> 
> So, the question is does it happens often enough to
warrent not using stop orders?  I guess this is all
dependent on the investor, if he/she have time to
monitor intraday action and the risk tolerance level.


tomas


- --- michael_niemotka@baxter.com wrote:
> 
> I have also been stopped out in similar instances,
> and I can only assume
> that the specialists see large blocks at certain
> price levels, because I
> cannot believe that they would manipulate the market
> unless it was really
> worth the while.   My $1000 worth of stock would be
> in the noise level if
> considered on its own.
> 
> Mike
> 
> 
> Mike Niemotka , PE
> Sr. Principal Engineer
> Baxter Healthcare Corporation
> Route 120 & Wilson Road
> Round Lake, IL 60073
> Tel (847) 270-4075
> Fax (847) 270-4525
> michael_niemotka@baxter.com
> 
> 
>                                                     
>                                                     
>                   
>                     Ian <ianstm@shaw.ca>            
>                                                     
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>                     Sent by:                     To:
>     canslim@lists.xmission.com                      
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>                     owner-canslim@lists.xm       cc:
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>                     ission.com                  
> Subject:     Re: [CANSLIM] Stop losses and DHI      
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>                     06/09/2003 11:50 AM             
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>                     Please respond to               
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>                     canslim                         
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> 
> 
> 
> Hi Jerome:
> 
> I think that your specific DHI example is just plain
> bad data.
> 
> As far as the market manipulation that you describe
> - it occurs regularly,
> although on a smaller scale, and with relatively
> illiquid stocks. I have
> never seen low-volume, stop-triggering moves from
> $28 to $20, but I have
> seen them from $8 to $6.50 and from $46 to $44 and
> from $14 to $12 etc...
> In these cases, it seems the market-maker or
> specialist is content to allow
> a market sell order to be filled at a fairly large
> gap, which in trun
> triggers stops, triggering more market sells,
> exacerbating the price gap.
> 
> Extreme swings on low volume are not meant to
> happen, as the mm or
> specialist is obligated to keep an "orderly market".
> Although, it seems to
> me that "order" is in the eye of the beholder in
> many cases.
> 
> At least 5 times in my life, I have had hard buy
> stops triggered (on stocks
> that I was short) at the highest tick of the day, at
> a price $0.50 - $1.00
> higher than than the range where the shares traded
> almost all day. In all
> cases, it appeared to me that my particular stop was
> targeted and run ...
> although the market definitely is a fertile ground
> for breeding paranoia :)
> 
> Cheers,
> 
> Ian
> 
> 
>  ----- Original Message -----
>  From: Jerome Buckmelter
>  To: 'CANSLIM LIST'
>  Sent: Sunday, June 08, 2003 9:12 AM
>  Subject: [CANSLIM] Stop losses and DHI
> 
>  WON does not like stop losses, but says for those
> who cannot watch their
>  stocks, it..s okay.  But is it?  What are the real
> pitfalls with stop
>  losses? I am concerned with what happened to DHI on
> Thursday.  According
>  to DGO, DHI plummeted from 28.58 to 20.22, about $9
> or 41%, in about one
>  minute apparently, then rebounded just as fast.  I
> would think that
>  everyone with a stop loss order between $28.58 and
> $20.22 got shaken out.
>  How can this happen?  Could some traders have
> conspired to sell a few
>  stocks, i.e. place an ask, at an extremely low
> price just to convert the
>  stop losses to market orders, and then swoop in to
> pick up the stock for
>  cheap?  Using DHI as an example, could a trader
> offer to sell one share at
>  $20.22, sell that share, and immediately follow up
> with market order for
>  10,000 shares, which in turn would be purchased
> from anywhere between
>  20.22 and $28.58?  Is this how the market works? 
> Or is there some safe
>  guards preventing this?  How else could the sudden
> and dramatic price
>  plunge have occurred with DHI?  Thanks in advance
> for the education in
>  this matter.
> 
>  Jerome Buckmelter
> 
> 
> 
> 
> 
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