Beginners' CANSLIM Question (WAS: RE: [CANSLIM] What is your profession? - off list)

From: "Kelly Short" <kelly.short@fw.us.neoris.com>
Subject: Beginners' CANSLIM Question (WAS: RE: [CANSLIM] What is your profession? - off list)
Date: Mon, 18 Aug 2003 14:25:19 -0500
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Bob and Harold,

I think your questions reflect the apprehension of many of the "newbies" =
on the list that are probably "lurking" so I'm posting your questions =
and my answer to the group.

Your collective questions were:
1) How'd you maintain the patience to study CANSLIM for a year before =
jumping
in? Did you do a lot of paper trading?=20
2) How do you develop your Watch List
3) How and when are you alerted to breakout opportunities? =20
4) At what point do you buy? =20
5) Do you gradually increase your positions?=20
6) Do you follow the CANSLIM "stop" recommendations, or might you exit =
earlier?=20
7) Do you buy only CWH breakouts?
8) I've seen a lot of discussion about developing your own style and =
process of selection and it's seems like an overwhelming learning curve =
- - Is that what you did during
that year?=20
9) Are there particular tools you've found especially useful for
screening and analysis?

And in response:
1) How'd you maintain the patience to study CANSLIM for a year before =
jumping
in? Did you do a lot of paper trading?
- - Three things made this easier: 1) The markets were not in a bull or =
sideways fashion, so using the rules of CANSLIM I should not have been =
making trades. This may sound odd since CANSLIM seems to say you HAVE to =
have a bull market for BO's to occur, but I found this is not the case. =
You just need a bull market to purchase BO's using CANSLIM. And since I =
was trying to make actual trades, I could have 20/20 hindsight on the =
Monday morning quarterbacking sessions. (That is, I waited till the =
stocks BO'd and then did an analysis of them to determine if I would =
have purchased that stock.) 2) Anything I do using my own money becomes =
very important to me. Therefore, I am the type of person that feels =
extremely certain I know what I'm doing before I go off and risk my =
money. 3) There are a lot of ways to make money in this world, and using =
CANSLIM is just one of them. I got/get more satisfaction out of knowing =
I made a proper trade than the financial returns. So, the academic study =
of the BO'd equities kept me engaged.=20
2) How do you develop your Watch List?
- - One word: cumbersome. I first tried creating spreadsheets from the =
lists contained within IBD. Then a combination of IBD, canslim.net, and =
the custom screener on Moneycentral.com. After a while, I realized none =
of these were producing good results, and certainly none better than the =
others. So, I pulled back and looked at the forest for the trees and =
realized the "for pay" services available for CANSLIM traders would be a =
much better use of my time and effort. Therefore, I chose =
breakoutwatch.com as my watch list source. There are a couple out there =
you can choose from. I thought this site was best for my needs/price =
point.
3) How and when are you alerted to breakout opportunities?
- - Again, breakoutwatch.com provides me with email/mobile phone alerts. I =
believe canslim.net also offers alerts, or you can create your own using =
desktop software (e.g. TC2000)
4) At what point do you buy?
- - Follow the CANSLIM rule explicitly when you are starting out.=20
5) Do you gradually increase your positions?
- - I am still learning too (it never ends) and have the same question. =
Ask me later...
6) Do you follow the CANSLIM "stop" recommendations, or might you exit =
earlier?
- - Good question. Gene answered the same question from me a few months =
ago. CANSLIM states the use of a 7% stop loss rule. But, you have to =
consider the nature of the stock. Does it usually have a wider range =
that would set you up for an immediate stop out? If so, then use a wider =
stop loss. Is the market in a raging bull trend? If so, then why accept =
any loss? Set a stop loss at 0% if you are certain you are getting in at =
the beginning of the BO. The key is to first use a stop loss rule and =
stick to it, and secondly to make the rule flexible for each stock.
7) Do you buy only CWH breakouts?
- - Yes. Ever use a metric socket to tighten a standard nut? It'll get you =
close but not perfect. The old saying is that there are a lot more great =
trading systems than great traders. Meaning, too many apply the wrong =
trading style to the wrong stock, or don't follow the rules of the =
trading system. If you want to use another trading style to follow =
breakouts, go for it, just follow its rules and don't cross-pollinate =
between trading systems.
8) I've seen a lot of discussion about developing your own style and =
process of selection and it's seems like an overwhelming learning curve =
- - Is that what you did during
that year of training?
- - This part always confused me too. How can I explicitly follow the =
CANSLIM rules and develop my own trading style? Don't these two =
philosophies contradict each other? No. What I found is that you learn =
from experience (paper experience is cheaper than real world =
experience...) that certain elements of the CANSLIM evaluation are more =
important than others. (The list changes as the market shifts its =
focus...) Therefore, you may experience that you always demand stocks =
have an unusually high quarter over quarter sales growth rate, etc., but =
are willing to allow other elements to barely meet the CANSLIM criteria. =
Also, you will never find a "perfect" CANSLIM stock and therefore you =
must choose which elements of the system are most important at that time =
in the market. You will develop this "style" on your own. Trust me.
9) Are there particular tools you've found especially useful for
screening and analysis?
- - There are many useful tools on the market. But let's face it, I have a =
limited amount of time and I place a high value on my time so I go for =
what gets the job done in the least amount of time. In my case, I chose =
breakoutwatch.com as my tool of choice. It gives me alerts, watchlists, =
and other nice features, all in a very user friendly and comprehensive =
summary that doesn't require me to jump all over the Internet tracking =
down that one piece of information. Other tools include canslim.net, =
TC2000, and other platforms. If you go this route, pick the one that =
makes the most sense for you.

In summary, 1) you never stop learning this system, 2) its all about =
supply and demand (critical!), and 3) this is a great group to learn =
with. I have learned more from this group than I ever could have from a =
book or IBD. Don't be afraid to ask questions if you don't understand =
what WON is saying, or CANSLIM's use on a particular stock. Best of luck =
to you both. I invite the group to add/contradict any of my answers =
above.=20

Kelly

- -----Original Message-----
From: RSCARDAMALIA@EMPIRE.STATE.NY.US
[mailto:RSCARDAMALIA@EMPIRE.STATE.NY.US]
Sent: Monday, August 18, 2003 1:44 PM
To: Kelly Short
Subject: RE: [CANSLIM] What is your profession? - off list



Kelly,
Sending this off-list because I'm an even newer newbie than you - about =
2
weeks! You note that you studied CANSLIM for a year before starting. =
First
question, how'd you maintain the patience for that long instead of =
jumping
in? Did you do a lot of paper trading? I've seen a lot of discussion =
about
developing your own style and process of selection and it's seems like =
an
overwhelming learning curve - lucky to understand what others are saying
about the charts let alone have my own style. Is that what you did =
during
that year? Are there particular tools you've found especially useful for
screening and analysis?

Thanks in advance for any advice.

Bob Scardamalia
Empire State Development
State Data Center
Phone: (518) 292-5300
Fax: (518) 292-5806
E-mail: rscardamalia@empire.state.ny.us
http://www.nylovesbiz.com/nysdc/default.asp

> -----Original Message-----
> From:	Kelly Short [SMTP:kelly.short@fw.us.neoris.com]
> Sent:	Friday, August 15, 2003 9:08 AM
> To:	canslim@lists.xmission.com
> Subject:	RE: [CANSLIM] What is your profession?
>=20
> Non-retired. Heck, just getting started (put me in the under 30 =
category).
> Technology, business development.
>=20
> Studied CANSLIM for 1 year before implementing. Very high degree of
> success since then. Currently at over 100% annualized return using
> CANSLIM. Plan to retire early!
>=20
> Kelly
>=20
> -----Original Message-----
> From: Davellil5@aol.com [mailto:Davellil5@aol.com]
> Sent: Thursday, August 14, 2003 5:42 PM
> To: canslim@lists.xmission.com
> Subject: Re: [CANSLIM] What is your profession?
>=20
>=20
> Retired!
>=20
> Formerly food product manufacturing, product development, and =
purchasing=20
> executive.  Also, enjoyed a career in industrial quality control.
>=20
> Using CANSLIM and variations thereof to maintain and improve net worth =
of=20
> assets in retirement.
>=20
> I'll bet the answers you receive to your email will reveal a =
fascinating=20
> variety of high accomplishments by our pals in CANSLIM -- because it
> requires such=20
> intensive intellectual effort.
>=20
> Regards,
>=20
> Dave S.
>=20
>=20
> -
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> -In the email body, write "subscribe canslim" or
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>=20
> -
> -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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