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From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1464 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Friday, June 8 2001 Volume 02 : Number 1464 In this issue: Re: [CANSLIM] ACF Re: [CANSLIM] ACF [CANSLIM] IPH Re: [CANSLIM] 7-8% stops [CANSLIM] Real Time? Re: [CANSLIM] Selling Stocks To Cut Losses Re: [CANSLIM] Selling Stocks To Cut Losses [CANSLIM] Apologies for double post Re: [CANSLIM] 7-8% stops ---------------------------------------------------------------------- Date: Fri, 08 Jun 2001 22:23:44 -0500 From: Ernie Hill <ernieh@ev1.net> Subject: Re: [CANSLIM] ACF This is not a high tight flag. A htf usually only has from 3-5 days of very tight congestion (the stock trades in a narrow range). These patterns must be viewed on a daily chart not a weekly. They are rare and often very profitable patterns to trade. Ann Hollingworth wrote: > I don't know. I'm not up on the htf. > > ----- Original Message ----- > From: "Norman" <theboyd@tisd.net> > To: <canslim@lists.xmission.com> > Sent: Friday, June 08, 2001 8:23 PM > Subject: [CANSLIM] ACF > > > Is this an example of the 'high tight flag' so often discussed (minus the > > 100-120% gain of course)? > > > > Norm > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 21:31:38 -0600 From: "Patrick Wahl" <pwahl@prodigy.net> Subject: Re: [CANSLIM] ACF I would say yes. Very low volatility, low daily price range, slight downward drift but very slow, so I guess that means an absence of selling, there just doesn't happen to be anything to push it higher for the moment, looks good. I would buy this on a break of a trend line drawn across recent highs rather than waiting for a new high. On 8 Jun 01, at 19:23, Norman wrote: > Is this an example of the 'high tight flag' so often discussed (minus the > 100-120% gain of course)? > > Norm > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 21:59:29 -0600 From: "Patrick Wahl" <pwahl@prodigy.net> Subject: [CANSLIM] IPH IDPH has formed a nice flag, volume really dried up today, an inside day. I also notice a strong acceleration in sales and earnings. - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 20:59:17 -0700 (PDT) From: Dave Cameron <dfcameron@yahoo.com> Subject: Re: [CANSLIM] 7-8% stops Jay, Thanks for bringing that up. I was beginning to think that I was the only one who listens to the tapes. Many people quote HTMMIS - but the tapes that I have add some brief insights that are not in the book; especially Ryan's insights. As I mentioned early in this thread - I don't use the 7-8% stop rule. My stops are purely based on technical indicators. I've never bought at the pivot - I can generally only trade when the market is not open. I tend to buy several percentage points above what I perceive to be the pivot or breakout point. As such, my stop is when the stock falls below the pivot or breaks down back into the base (as Ryan says on the tapes). Of course, to Tom's point - since I tend to get in (on average) about 6% above the breakout point - I end up with a fair amount of 7% losses anyway. But its not an objective. As a clarification, I don't chase stocks. I've had a few on my watchlist that once they broke out - they REALLY broke out - and I never could get in. Anna recently mentioned BEIQ. I've been watching it for a few weeks - then it broke out by about 10% in one day - and has just kept going up. I didn't want to buy on the 10% - thought it would be too extended. Now its up almost another 10%. DFXI is another example. So... I tend to miss some big movers - but I don't want to take the risk that I'd have either a 12% loss (where it would fall back into the base) or get stopped out at 7% which is still above the breakout price. Make sense? Dave - --- Jay Oken <imjoken@mindspring.com> wrote: > I think we are understating the anticipated success rate. I own and > listen often to "How and When to Buy Stocks" and "How and When to > Sell Stocks". Here is what the Buy Stocks tape has to say: > > Question: How often can you reasonably expect to be right when > picking stocks since we don't want to have people's > expectations be too high? > > David Ryan's Answer: "If you're buying the right stock, with the > CANSLIM characteristics, and your buying it at exactly the right > time, when it's coming out of a perfect base, you should be correct > maybe 80% of the time. But that's a little unrealistic because we > get emotions involved and all stocks don't set up perfectly, so I > would say about 60-70% of your transactions should be correct. The > whole key is when your wrong to keep those losses very small. You > can make a lot of money being right just 50% of the time as long as > you learn to cut your losses quickly." > > These tapes are put out by IBD. They are great listening for your > commute and I listen to them often to reinforce The WON/CANSLIM > principals. > > P.S. They recommend a couple of books at the end of each tape. The > Nicolas Darvas book, How I Made Two Million Dollars in the Stock > Market is worth reading but the Stock Operator book by Lefve is a > waste of time. > > > ----- Original Message ----- > From: "Tom Worley" <stkguru@netside.net> > To: <canslim@lists.xmission.com> > Sent: Friday, June 08, 2001 4:22 PM > Subject: Re: [CANSLIM] 7-8% stops > > > > If you are doing worse than a 30% rate, then it's time to recheck > > what you are doing. > > > > Remember that a 30% rate should not mean that you are barely > > breaking even. It is based on every one of your 7 wrong stocks > > being stopped out at 7-8%. In reality, you should have gotten out > > of some with a much smaller loss, and maybe even a tiny profit on > > a few. > > > > And if you held on to the 3 right ones past 20%, then your > > profits may have also been far greater. > > > > Tom Worley > > stkguru@netside.net > > AIM: TexWorley > > > > ----- Original Message ----- > > From: esetser <esetser@covad.net> > > To: <canslim@lists.xmission.com> > > Sent: Friday, June 08, 2001 7:09 PM > > Subject: Re: [CANSLIM] 7-8% stops > > > > > > So the 30% success rate should get you roughly even? I guess > > that would > > make it an absolute minimum. Looking back, this difficult market > > and some > > bad decisions have reduced my success rate from around 50% > > mid-last year to > > about 30% now. That period has caused me to lose about 10% of my > > funds, > > but that level seems to be holding at this point. > > > > Overall, I guess I agree with some others that this rally is > > becoming more > > suspect, and we should all be careful at this point. > > > > At 06:45 PM 6/8/01 -0400, you wrote: > > >It mostly came from the training I got from WON staffers in > > >explaining the reasons for an 8% stop loss and for selling for a > > >20% profit (7 wrong stocks times 8% = 56% while 3 right stocks > > >times 20% = 60%). > > > > > >I think WON also mentioned it in the article from Reg. Rep. > > >magazine that I still haven't found. > > > > > >Tom Worley > > >stkguru@netside.net > > >AIM: TexWorley > > > > > >----- Original Message ----- > > >From: esetser <esetser@covad.net> > > >To: <canslim@lists.xmission.com> > > >Sent: Friday, June 08, 2001 6:32 PM > > >Subject: Re: [CANSLIM] 7-8% stops > > > > > > > > >Where did you get the idea that WON's success rate was .300?? I > > >did see > > >one note in HTMMIS talking about buying during a weak market, > > and > > >how the > > >tight sell points helped him make money with only a .333 success > > >rate. I > > >think this is to illustrate a point (and even then, in a bad > > >market where > > >he shouldn't have been investing), rather than to define his > > >overall > > >success rate!! > > > > > > At 09:15 AM 6/8/01 -0400, you wrote: > > >>I wouldn't count on it increasing your probability of being > > >right > > >>to over .300, since presumably WON was buying at the pivot, and > > >>that was his success rate. > > >> > > >>I do agree that if you are unable to buy at the pivot point, > > you > > >>may have to increase the size of your stop loss if you are to > > >>place it correctly. I have said that before. Personally, I > > don't > > >>like increasing it, which is why I prefer to increase my risk > > by > > >>buying in the base, then chancing that it doesn't break out, or > > >>breaks down. > > >> > > >>That at least gives me the chance to bail out while still in > > the > > >>base if it begins to look like it will never b/o. It's not > > >>something that I recommend for most, as it violates quite a few > > >>rules. > > >> > > >>Tom Worley > > >>stkguru@netside.net > > >>AIM: TexWorley > > >> > > >>----- Original Message ----- > > >>From: Tracie Oken <imtoken@yahoo.com> > > >>To: <canslim@lists.xmission.com> > > >>Sent: Friday, June 08, 2001 8:51 AM > > >>Subject: Re: [CANSLIM] 7-8% stops > > >> > > >> > > >>The 7-8% rule came about because they found that great stocks > > >>rarely dropped > > >>7-8% "below the pivot". (Not because they think 7-8% is a > > >>reasonable amount > > >>to risk.) Therefore, you could buy a stock at 5% above its > > pivot > > >>and get > > >>stopped out at 2% below but that would still be considered a > > >>normal pullback > > >>(and if you were lucky enough to buy right at the pivot you > > >would > > >>not be > > >>stopped out). The problem is (as has been mentioned here > > before) > > >>that it is > > >>almost impossible for the average investor to buy a stock right > > >>at the > > >>pivot. It makes the case that you should set your stop at 7-8% > > >>below the > > >>pivot even though your buy point may create a larger loss then > > >>7-8%. If you > > >>still keep to the rule of not buying beyond 5% on the upside > > >this > > >>should > > >>give you a maximum loss of approximately 12%. Yes, Tom, this > > >will > > >>increase > > >>your dollar losses on each stock but it should also increase > > >your > > >>percentage > > >>of winning picks to greater than .300. > > >> > > >>----- Original Message ----- > > >>From: "Dave Cameron" <dfcameron@yahoo.com> > > >>To: <canslim@lists.xmission.com> > > >>Sent: Tuesday, June 05, 2001 8:51 PM > > >>Subject: [CANSLIM] 7-8% stops > > >> > > >> > > >>> A few people have mentioned the hard 7-8% stop as insurance > > >>against > > >>> taking a big loss. > > >>> > > >>> You know, I never use it. Its not that I don't set a stop - > > >>but I > > >>> do it based on the chart - not on a percentage. As an > > >>example, > > >>> suppose a stock has been basing between 25 and 30 for several > > >>months, > > >>> then breaks out to 33 on high volume. If I bought at 33 > > >>(which is > > >>> higher than WON says to buy - but for those of us who can't > > >>trade > > >>> real-time...) my stop point would be 29.90 (I can't get used > > >to > > >>> decimals yet). Because this would put it back in the base. > > >>All > > >>> right, its a 10% stop - but its common for a stock like this > > >to > > >>drop > > >>> 8-9% to say, 30.25 and then bounce back up. Of course, if > > >I > > >>were > === message truncated === ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Get personalized email addresses from Yahoo! Mail - only $35 a year! http://personal.mail.yahoo.com/ - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 21:08:30 -0700 (PDT) From: Dave Cameron <dfcameron@yahoo.com> Subject: [CANSLIM] Real Time? I'm confused as to the number of people who need real-time quotes, trade actively during market hours, etc... As someone who has held down a full-time job for the past 14 years - requiring me to be at work during the entire time the market is open - - I've never had a need for real time quotes because I couldn't act on them anyway. I'm beginning to feel like a minority here. Would people be willing to volunteer if they are able to trade during hours when the market is open - and if so, is it a function of a desk job with a computer - or you have made the decision to make trading a major source of your income. Thanks, Dave ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Get personalized email addresses from Yahoo! Mail - only $35 a year! http://personal.mail.yahoo.com/ - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 21:13:33 -0700 (PDT) From: Dave Cameron <dfcameron@yahoo.com> Subject: Re: [CANSLIM] Selling Stocks To Cut Losses This is good advice for life in general as well as investing. Like many others, my biggest mistakes by far have been neglecting to cut losses. Although, I will say, I've had a couple 60% losses that were nearly unavoidable in that these stocks closed down 40%+ from their previous high - and I was hoping for a dead cat bounce. Most recent example was QWST (now Q). I bought while at a new high - only to find that they decided to take on a highly leveraged position and announce over a weekend that they were buying BLS. The stock opened 35% below my stop the next morning. It always irritates the hell out of me when I hear WON say that every stock that has dropped 30% had to first drop 5%,6%,7% and so on, and you should get out at 7%. He says something like this on the tape "How to Sell Stocks" that I have. Its great advice to cut your losses, I should do more of it - but stocks gap - and its not rare. Where am I going with this? If I only had a 30% success rate on my stocks - I'd be seriously below break-even because the few BIG drops on gaps down would kill me. I tend to be about at 50%. Dave - --- Aitchbom@aol.com wrote: > Selling Stocks To Cut Losses > "It's a dangerous fallacy to assume that because a stock goes down, > it has to > come back up. Many don't, and some take years to recover." > > --William J. O'Neil, Chairman & Founder of Investor's Business > Daily > > Know When To Fold 'Em > > Nobody's right all the time in the market, not even veteran market > professionals. But as the famous investor Bernard Baruch once said, > "Even > being right three or four times out of 10 should yield a person a > fortune if > they have the sense to cut losses quickly." > Being a successful investor is just as much about limiting losses > as it is > about riding a winning stock. Downturns are a part of life in the > market, and > you must act decisively to shield yourself from excessive losses. > If your > stock selection doesn't work out and you're faced with a loss, > don't let your > pride stop you from admitting you've made a mistake and acting > quickly. Cut > your losses early and move on. You must make rational decisions, > instead of > trying to rationalize your way out of a costly mistake. > It's not just your own personal opinions that can be wrong. > Analysts or > market commentators can be just as erroneous, and basing your > decisions on > their opinions can often lead to disastrous results. Investors > often buy > loser stocks, justifying their decision with remarks like, "All > these Wall > Street analysts are saying great things about this company," or > "This > technology is the greatest thing since sliced bread. The market > doesn't > realize it yet, but it's bound to become a household item." Famous > last words. > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Get personalized email addresses from Yahoo! Mail - only $35 a year! http://personal.mail.yahoo.com/ - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 21:13:33 -0700 (PDT) From: Dave Cameron <dfcameron@yahoo.com> Subject: Re: [CANSLIM] Selling Stocks To Cut Losses This is good advice for life in general as well as investing. Like many others, my biggest mistakes by far have been neglecting to cut losses. Although, I will say, I've had a couple 60% losses that were nearly unavoidable in that these stocks closed down 40%+ from their previous high - and I was hoping for a dead cat bounce. Most recent example was QWST (now Q). I bought while at a new high - only to find that they decided to take on a highly leveraged position and announce over a weekend that they were buying BLS. The stock opened 35% below my stop the next morning. It always irritates the hell out of me when I hear WON say that every stock that has dropped 30% had to first drop 5%,6%,7% and so on, and you should get out at 7%. He says something like this on the tape "How to Sell Stocks" that I have. Its great advice to cut your losses, I should do more of it - but stocks gap - and its not rare. Where am I going with this? If I only had a 30% success rate on my stocks - I'd be seriously below break-even because the few BIG drops on gaps down would kill me. I tend to be about at 50%. Dave - --- Aitchbom@aol.com wrote: > Selling Stocks To Cut Losses > "It's a dangerous fallacy to assume that because a stock goes down, > it has to > come back up. Many don't, and some take years to recover." > > --William J. O'Neil, Chairman & Founder of Investor's Business > Daily > > Know When To Fold 'Em > > Nobody's right all the time in the market, not even veteran market > professionals. But as the famous investor Bernard Baruch once said, > "Even > being right three or four times out of 10 should yield a person a > fortune if > they have the sense to cut losses quickly." > Being a successful investor is just as much about limiting losses > as it is > about riding a winning stock. Downturns are a part of life in the > market, and > you must act decisively to shield yourself from excessive losses. > If your > stock selection doesn't work out and you're faced with a loss, > don't let your > pride stop you from admitting you've made a mistake and acting > quickly. Cut > your losses early and move on. You must make rational decisions, > instead of > trying to rationalize your way out of a costly mistake. > It's not just your own personal opinions that can be wrong. > Analysts or > market commentators can be just as erroneous, and basing your > decisions on > their opinions can often lead to disastrous results. Investors > often buy > loser stocks, justifying their decision with remarks like, "All > these Wall > Street analysts are saying great things about this company," or > "This > technology is the greatest thing since sliced bread. The market > doesn't > realize it yet, but it's bound to become a household item." Famous > last words. > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Get personalized email addresses from Yahoo! Mail - only $35 a year! http://personal.mail.yahoo.com/ - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 8 Jun 2001 21:16:34 -0700 (PDT) From: Dave Cameron <dfcameron@yahoo.com> Subject: [CANSLIM] Apologies for double post I hit reply all - sent it twice. Oops. Thanks for bearing with me here. ===== Dave Cameron dfcameron@yahoo.com __________________________________________________ Do You Yahoo!? Get personalized email addresses from Yahoo! Mail - only $35 a year! http://personal.mail.yahoo.com/ - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Fri, 08 Jun 2001 23:20:51 -0500 From: Ernie Hill <ernieh@ev1.net> Subject: Re: [CANSLIM] 7-8% stops - --------------CB377DE66C10F790099FF07C Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit It appears that I sparked a lively debate about the 8% stop rule. I thought Tracie had an excellent post. I was not aware of how the 8% rule had come into affect. However, even though historically great stocks typically may not have dropped more than 8% below the pivot, I am not sure that this is still the case in the market today or even the past few years. Because of how volatile the market has become, and because canslim stocks are typically small high beta stocks I still prefer to use technical stops. Sometimes these stops are less than 8%, sometimes considerably more than 8%. The key is to make sure it is a true canslim stock to begin with. When I do my analysis the chart pattern is the last thing I look for, everything else must fit strict canslim criteria first. Using this approach is how you get the winning percentage that David Ryan speaks about in the post from Jay. I know in my experience that setting tight stops based on an arbitrary loss that I am willing to take has taken me out of many trades that would have been profitable if I had used a technical stop instead. I intend to keep track of my positions in the future to see if I would come out better with a strict 8% stop loss below the pivot point or by using technical stops like I do. I will keep you posted. Jay Oken wrote: > I think we are understating the anticipated success rate. I own and > listen often to "How and When to Buy Stocks" and "How and When to Sell > Stocks". Here is what the Buy Stocks tape has to say: Question: How > often can you reasonably expect to be right when picking stocks since > we don't want to have people's expectations be > too high? David Ryan's Answer: "If you're buying the right stock, with > the CANSLIM characteristics, and your buying it at exactly the right > time, when it's coming out of a perfect base, you should be correct > maybe 80% of the time. But that's a little unrealistic because we get > emotions involved and all stocks don't set up perfectly, so I would > say about 60-70% of your transactions should be correct. The whole key > is when your wrong to keep those losses very small. You can make a lot > of money being right just 50% of the time as long as you learn to cut > your losses quickly." These tapes are put out by IBD. They are great > listening for your commute and I listen to them often to reinforce The > WON/CANSLIM principals. P.S. They recommend a couple of books at the > end of each tape. The Nicolas Darvas book, How I Made Two Million > Dollars in the Stock Market is worth reading but the Stock Operator > book by Lefve is a waste of time. ----- Original Message -----From: > "Tom Worley" <stkguru@netside.net>To: > <canslim@lists.xmission.com>Sent: Friday, June 08, 2001 4:22 > PMSubject: Re: [CANSLIM] 7-8% stops > If you are doing worse than a > 30% rate, then it's time to recheck > > what you are doing. > > > > Remember that a 30% rate should not mean that you are barely > > breaking even. It is based on every one of your 7 wrong stocks > > being stopped out at 7-8%. In reality, you should have gotten out > > of some with a much smaller loss, and maybe even a tiny profit on > > a few. > > > > And if you held on to the 3 right ones past 20%, then your > > profits may have also been far greater. > > > > Tom Worley > > stkguru@netside.net > > AIM: TexWorley > > > > ----- Original Message ----- > > From: esetser <esetser@covad.net> > > To: <canslim@lists.xmission.com> > > Sent: Friday, June 08, 2001 7:09 PM > > Subject: Re: [CANSLIM] 7-8% stops > > > > > > So the 30% success rate should get you roughly even? I guess > > that would > > make it an absolute minimum. Looking back, this difficult market > > and some > > bad decisions have reduced my success rate from around 50% > > mid-last year to > > about 30% now. That period has caused me to lose about 10% of my > > funds, > > but that level seems to be holding at this point. > > > > Overall, I guess I agree with some others that this rally is > > becoming more > > suspect, and we should all be careful at this point. > > > > At 06:45 PM 6/8/01 -0400, you wrote: > > >It mostly came from the training I got from WON staffers in > > >explaining the reasons for an 8% stop loss and for selling for a > > >20% profit (7 wrong stocks times 8% = 56% while 3 right stocks > > >times 20% = 60%). > > > > > >I think WON also mentioned it in the article from Reg. Rep. > > >magazine that I still haven't found. > > > > > >Tom Worley > > >stkguru@netside.net > > >AIM: TexWorley > > > > > >----- Original Message ----- > > >From: esetser <esetser@covad.net> > > >To: <canslim@lists.xmission.com> > > >Sent: Friday, June 08, 2001 6:32 PM > > >Subject: Re: [CANSLIM] 7-8% stops > > > > > > > > >Where did you get the idea that WON's success rate was .300?? I > > >did see > > >one note in HTMMIS talking about buying during a weak market, > > and > > >how the > > >tight sell points helped him make money with only a .333 success > > >rate. I > > >think this is to illustrate a point (and even then, in a bad > > >market where > > >he shouldn't have been investing), rather than to define his > > >overall > > >success rate!! > > > > > > At 09:15 AM 6/8/01 -0400, you wrote: > > >>I wouldn't count on it increasing your probability of being > > >right > > >>to over .300, since presumably WON was buying at the pivot, and > > >>that was his success rate. > > >> > > >>I do agree that if you are unable to buy at the pivot point, > > you > > >>may have to increase the size of your stop loss if you are to > > >>place it correctly. I have said that before. Personally, I > > don't > > >>like increasing it, which is why I prefer to increase my risk > > by > > >>buying in the base, then chancing that it doesn't break out, or > > >>breaks down. > > >> > > >>That at least gives me the chance to bail out while still in > > the > > >>base if it begins to look like it will never b/o. It's not > > >>something that I recommend for most, as it violates quite a few > > >>rules. > > >> > > >>Tom Worley > > >>stkguru@netside.net > > >>AIM: TexWorley > > >> > > >>----- Original Message ----- > > >>From: Tracie Oken <imtoken@yahoo.com> > > >>To: <canslim@lists.xmission.com> > > >>Sent: Friday, June 08, 2001 8:51 AM > > >>Subject: Re: [CANSLIM] 7-8% stops > > >> > > >> > > >>The 7-8% rule came about because they found that great stocks > > >>rarely dropped > > >>7-8% "below the pivot". (Not because they think 7-8% is a > > >>reasonable amount > > >>to risk.) Therefore, you could buy a stock at 5% above its > > pivot > > >>and get > > >>stopped out at 2% below but that would still be considered a > > >>normal pullback > > >>(and if you were lucky enough to buy right at the pivot you > > >would > > >>not be > > >>stopped out). The problem is (as has been mentioned here > > before) > > >>that it is > > >>almost impossible for the average investor to buy a stock right > > >>at the > > >>pivot. It makes the case that you should set your stop at 7-8% > > >>below the > > >>pivot even though your buy point may create a larger loss then > > >>7-8%. If you > > >>still keep to the rule of not buying beyond 5% on the upside > > >this > > >>should > > >>give you a maximum loss of approximately 12%. Yes, Tom, this > > >will > > >>increase > > >>your dollar losses on each stock but it should also increase > > >your > > >>percentage > > >>of winning picks to greater than .300. > > >> > > >>----- Original Message ----- > > >>From: "Dave Cameron" <dfcameron@yahoo.com> > > >>To: <canslim@lists.xmission.com> > > >>Sent: Tuesday, June 05, 2001 8:51 PM > > >>Subject: [CANSLIM] 7-8% stops > > >> > > >> > > >>> A few people have mentioned the hard 7-8% stop as insurance > > >>against > > >>> taking a big loss. > > >>> > > >>> You know, I never use it. Its not that I don't set a stop - > > >>but I > > >>> do it based on the chart - not on a percentage. As an > > >>example, > > >>> suppose a stock has been basing between 25 and 30 for several > > >>months, > > >>> then breaks out to 33 on high volume. If I bought at 33 > > >>(which is > > >>> higher than WON says to buy - but for those of us who can't > > >>trade > > >>> real-time...) my stop point would be 29.90 (I can't get used > > >to > > >>> decimals yet). Because this would put it back in the base. > > >>All > > >>> right, its a 10% stop - but its common for a stock like this > > >to > > >>drop > > >>> 8-9% to say, 30.25 and then bounce back up. Of course, if > > >I > > >>were > > >>> fortunate enough to buy the same stock at 30.5, I'd still > > have > > >>a stop > > >>> at 29.90, and then have a 1-2% stop. The percentage isn't > > >>relevant > > >>> - the placement relative to the chart action is. > > >>> > > >>> Anyone else have any thoughts? > > >>> > > >>> > > >>> ===== > > >>> Dave Cameron > > >>> dfcameron@yahoo.com > > >>> > > >>> __________________________________________________ > > >>> Do You Yahoo!? > > >>> Get personalized email addresses from Yahoo! Mail - only $35 > > >>> a year! http://personal.mail.yahoo.com/ > > >>> > > >>> - > > >>> -To subscribe/unsubscribe, email "majordomo@xmission.com" > > >>> -In the email body, write "subscribe canslim" or > > >>> -"unsubscribe canslim". Do not use quotes in your email. > > >> > > >> > > >>- > > >>-To subscribe/unsubscribe, email "majordomo@xmission.com" > > >>-In the email body, write "subscribe canslim" or > > >>-"unsubscribe canslim". Do not use quotes in your email. > > >> > > >> > > >> > > >>- > > >>-To subscribe/unsubscribe, email "majordomo@xmission.com" > > >>-In the email body, write "subscribe canslim" or > > >>-"unsubscribe canslim". Do not use quotes in your email. > > >> > > >> > > > > > >- > > >-To subscribe/unsubscribe, email "majordomo@xmission.com" > > >-In the email body, write "subscribe canslim" or > > >-"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > > > > >- > > >-To subscribe/unsubscribe, email "majordomo@xmission.com" > > >-In the email body, write "subscribe canslim" or > > >-"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. - --------------CB377DE66C10F790099FF07C Content-Type: text/html; charset=us-ascii Content-Transfer-Encoding: 7bit <!doctype html public "-//w3c//dtd html 4.0 transitional//en"> <html> It appears that I sparked a lively debate about the 8% stop rule. I thought Tracie had an excellent post. I was not aware of how the 8% rule had come into affect. However, even though historically great stocks typically may not have dropped more than 8% below the pivot, I am not sure that this is still the case in the market today or even the past few years. Because of how volatile the market has become, and because canslim stocks are typically small high beta stocks I still prefer to use technical stops. Sometimes these stops are less than 8%, sometimes considerably more than 8%. The key is to make sure it is a true canslim stock to begin with. When I do my analysis the chart pattern is the last thing I look for, everything else must fit strict canslim criteria first. Using this approach is how you get the winning percentage that David Ryan speaks about in the post from Jay. I know in my experience that setting tight stops based on an arbitrary loss that I am willing to take has taken me out of many trades that would have been profitable if I had used a technical stop instead. I intend to keep track of my positions in the future to see if I would come out better with a strict 8% stop loss below the pivot point or by using technical stops like I do. I will keep you posted. Jay Oken wrote: <blockquote TYPE=CITE><style></style> I think we are understating the anticipated success rate. I own and listen often to "How and When to Buy Stocks" and "How and When to Sell Stocks". Here is what the Buy Stocks tape has to say: Question: How often can you reasonably expect to be right when picking stocks since we don't want to have people's expectations be too high? David Ryan's Answer: "If you're buying the right stock, with the CANSLIM characteristics, and your buying it at exactly the right time, when it's coming out of a perfect base, you should be correct maybe 80% of the time. But that's a little unrealistic because we get emotions involved and all stocks don't set up perfectly, so I would say about 60-70% of your transactions should be correct. The whole key is when your wrong to keep those losses very small. You can make a lot of money being right just 50% of the time as long as you learn to cut your losses quickly." These tapes are put out by IBD. They are great listening for your commute and I listen to them often to reinforce The WON/CANSLIM principals. P.S. They recommend a couple of books at the end of each tape. The Nicolas Darvas book, How I Made Two Million Dollars in the Stock Market is worth reading but the Stock Operator book by Lefve is a waste of time. ----- Original Message -----From: "Tom Worley" <<a href="mailto:stkguru@netside.net">stkguru@netside.net</a>>To: <<a href="mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</a>>Sent: Friday, June 08, 2001 4:22 PMSubject: Re: [CANSLIM] 7-8% stops > If you are doing worse than a 30% rate, then it's time to recheck > what you are doing. > > Remember that a 30% rate should not mean that you are barely > breaking even. It is based on every one of your 7 wrong stocks > being stopped out at 7-8%. In reality, you should have gotten out > of some with a much smaller loss, and maybe even a tiny profit on > a few. > > And if you held on to the 3 right ones past 20%, then your > profits may have also been far greater. > > Tom Worley > <a href="mailto:stkguru@netside.net">stkguru@netside.net</a> > AIM: TexWorley > > ----- Original Message ----- > From: esetser <<a href="mailto:esetser@covad.net">esetser@covad.net</a>> > To: <<a href="mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</a>> > Sent: Friday, June 08, 2001 7:09 PM > Subject: Re: [CANSLIM] 7-8% stops > > > So the 30% success rate should get you roughly even? I guess > that would > make it an absolute minimum. Looking back, this difficult market > and some > bad decisions have reduced my success rate from around 50% > mid-last year to > about 30% now. That period has caused me to lose about 10% of my > funds, > but that level seems to be holding at this point. > > Overall, I guess I agree with some others that this rally is > becoming more > suspect, and we should all be careful at this point. > > At 06:45 PM 6/8/01 -0400, you wrote: > >It mostly came from the training I got from WON staffers in > >explaining the reasons for an 8% stop loss and for selling for a > >20% profit (7 wrong stocks times 8% = 56% while 3 right stocks > >times 20% = 60%). > > > >I think WON also mentioned it in the article from Reg. Rep. > >magazine that I still haven't found. > > > >Tom Worley > >stkguru@netside.net > >AIM: TexWorley > > > >----- Original Message ----- > >From: esetser <<a href="mailto:esetser@covad.net">esetser@covad.net</a>> > >To: <<a href="mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</a>> > >Sent: Friday, June 08, 2001 6:32 PM > >Subject: Re: [CANSLIM] 7-8% stops > > > > > >Where did you get the idea that WON's success rate was .300?? I > >did see > >one note in HTMMIS talking about buying during a weak market, > and > >how the > >tight sell points helped him make money with only a .333 success > >rate. I > >think this is to illustrate a point (and even then, in a bad > >market where > >he shouldn't have been investing), rather than to define his > >overall > >success rate!! > > > > At 09:15 AM 6/8/01 -0400, you wrote: > >>I wouldn't count on it increasing your probability of being > >right > >>to over .300, since presumably WON was buying at the pivot, and > >>that was his success rate. > >> > >>I do agree that if you are unable to buy at the pivot point, > you > >>may have to increase the size of your stop loss if you are to > >>place it correctly. I have said that before. Personally, I > don't > >>like increasing it, which is why I prefer to increase my risk > by > >>buying in the base, then chancing that it doesn't break out, or > >>breaks down. > >> > >>That at least gives me the chance to bail out while still in > the > >>base if it begins to look like it will never b/o. It's not > >>something that I recommend for most, as it violates quite a few > >>rules. > >> > >>Tom Worley > >>stkguru@netside.net > >>AIM: TexWorley > >> > >>----- Original Message ----- > >>From: Tracie Oken <<a href="mailto:imtoken@yahoo.com">imtoken@yahoo.com</a>> > >>To: <<a href="mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</a>> > >>Sent: Friday, June 08, 2001 8:51 AM > >>Subject: Re: [CANSLIM] 7-8% stops > >> > >> > >>The 7-8% rule came about because they found that great stocks > >>rarely dropped > >>7-8% "below the pivot". (Not because they think 7-8% is a > >>reasonable amount > >>to risk.) Therefore, you could buy a stock at 5% above its > pivot > >>and get > >>stopped out at 2% below but that would still be considered a > >>normal pullback > >>(and if you were lucky enough to buy right at the pivot you > >would > >>not be > >>stopped out). The problem is (as has been mentioned here > before) > >>that it is > >>almost impossible for the average investor to buy a stock right > >>at the > >>pivot. It makes the case that you should set your stop at 7-8% > >>below the > >>pivot even though your buy point may create a larger loss then > >>7-8%. If you > >>still keep to the rule of not buying beyond 5% on the upside > >this > >>should > >>give you a maximum loss of approximately 12%. Yes, Tom, this > >will > >>increase > >>your dollar losses on each stock but it should also increase > >your > >>percentage > >>of winning picks to greater than .300. > >> > >>----- Original Message ----- > >>From: "Dave Cameron" <<a href="mailto:dfcameron@yahoo.com">dfcameron@yahoo.com</a>> > >>To: <<a href="mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</a>> > >>Sent: Tuesday, June 05, 2001 8:51 PM > >>Subject: [CANSLIM] 7-8% stops > >> > >> > >>> A few people have mentioned the hard 7-8% stop as insurance > >>against > >>> taking a big loss. > >>> > >>> You know, I never use it. Its not that I don't set a stop - > >>but I > >>> do it based on the chart - not on a percentage. As an > >>example, > >>> suppose a stock has been basing between 25 and 30 for several > >>months, > >>> then breaks out to 33 on high volume. If I bought at 33 > >>(which is > >>> higher than WON says to buy - - but for those of us who can't > >>trade > >>> real-time...) my stop point would be 29.90 (I can't get used > >to > >>> decimals yet). Because this would put it back in the base. > >>All > >>> right, its a 10% stop - but its common for a stock like this > >to > >>drop > >>> 8-9% to say, 30.25 and then bounce back up. Of course, if > >I > >>were > >>> fortunate enough to buy the same stock at 30.5, I'd still > have > >>a stop > >>> at 29.90, and then have a 1-2% stop. The percentage isn't > >>relevant > >>> - the placement relative to the chart action is. > >>> > >>> Anyone else have any thoughts? > >>> > >>> > >>> ===== > >>> Dave Cameron > >>> <a href="mailto:dfcameron@yahoo.com">dfcameron@yahoo.com</a> > >>> > >>> __________________________________________________ > >>> Do You Yahoo!? > >>> Get personalized email addresses from Yahoo! Mail - only $35 > >>> a year! <a href="http://personal.mail.yahoo.com/">http://personal.mail.yahoo.com/</a> > >>> > >>> - > >>> -To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > >>> -In the email body, write "subscribe canslim" or > >>> -"unsubscribe canslim". Do not use quotes in your email. > >> > >> > >>- > >>-To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > >>-In the email body, write "subscribe canslim" or > >>-"unsubscribe canslim". Do not use quotes in your email. > >> > >> > >> > >>- > >>-To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > >>-In the email body, write "subscribe canslim" or > >>-"unsubscribe canslim". Do not use quotes in your email. > >> > >> > > > >- > >-To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > >-In the email body, write "subscribe canslim" or > >-"unsubscribe canslim". Do not use quotes in your email. > > > > > > > >- > >-To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > >-In the email body, write "subscribe canslim" or > >-"unsubscribe canslim". Do not use quotes in your email. > > > > > > - > -To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > > > > - > -To subscribe/unsubscribe, email "<a href="mailto:majordomo@xmission.com">majordomo@xmission.com</a>" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email.</blockquote> </html> - --------------CB377DE66C10F790099FF07C-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #1464 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.