Registered User
Joined: 8/24/2006
Posts: 46
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I have heard conflicting statement about stop losses some claims that it needs to be flexible other claim it is a rigid stop. Now with time while in the trade, a stock will inevitably change based on good or bad news and market sentiment. At present, I am not sure if I should change the initial stop when the price is going against me and approaching a danger zone while at the same time I am convinced that it will go up.
Some source says to set the initial stop at a fixed % from buying price. Other sources claim that a good initial stop is 0.5 % below the lowest low of the previous day or two which ever is the lowest. Recently I came across the posting of Sir Old Viking on Worden’s regarding initial stop relative to fluctuation. Bruce posted various PCFs relative to this subject. I incorporated the PCF with Sir Viking suggestions and got this formula. I currently have adopted this methodology to calculate a stop based on 10 day price volatility.
((((AVGH10 - AVGL10) / 2 + (ABS(H - C1) + ABS(C1 - L) + ABS(H1 - C2) + ABS(C2 - L1) + ABS(H2 - C3) + ABS(C3 - L2) + ABS(H3 - C4) + ABS(C4 - L3) + ABS(H4 - C5) + ABS(C5 - L4) + ABS(H5 - C6) + ABS(C6 - L5) + ABS(H6 - C7) + ABS(C7 - L6) + ABS(H7 - C8) + ABS(C8 - L7) + ABS(H8 - C9) + ABS(C9 - L8) + ABS(H9 - C10) + ABS(C10 - L9)) / 20)*-2)+ C)
Anyone’s comment on the subject of initial stop and trailing stops is appreciated.
Thank you
Amp39
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Registered User
Joined: 12/21/2004
Posts: 902
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One of the behaviors that I look for in a stock is a history of predictable interaction with a particular ma support line. Every time it hits the line it bounces off (usually with volume).
One of the keys to risk/reward analysis, is identifying such points for entry to minimize the risk. If, for example, I am entering a stock that has a history of bouncing off its 13ema, I want to enter as close to the 13 ema as possible. I also want to place a hard stop under the 13 ema. If, for some reason, the stock moves below the 13ema, I will immediately, and virtually painlessly know that the stock's behavior has changed and the factors that I depended on in my analysis that lead me to make the trade are probably no longer operable and there's no reason to stay with that stock.
The whole point of risk/reward analysis is to minimize the amount that one puts at risk in order to gain the knowledge that it is going to be a profitable trade or not - and IMO putting a hard stop at that point of lowest risk is integral.
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Registered User
Joined: 12/2/2004
Posts: 1,775
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In a nutshell here is my stop loss method more or less. I like hohandy's take on locating recent support levels and buying as closely as possible to that, so that the stop can be placed at a logical pt. underneath that support that would yield a minimal loss if hit. That's for buying on pullbacks in most cases. I don't believe in at all, not one iota, in setting fixed percentages. On breakouts I want to buy soon as possible after resistance is taken out and then place my stop just underneath the old resistance which is now new support. IF, IF after I buy I'm up about 10% plus I want to move my stop so at the very least I will breakeven and not take a loss on the trade. IF price later moves up about 20-25% I'm going to immediately take 1/3 or 1/2 off the table for a nice little profit, then move my stop up for the remainder but loosely so, so that price will have more wiggle room, but it the stop is hit anyway I will still have a profit for entire trade. If a really good winner is on hand and it makes more and more gains, keep the stop loose but keep moving it up.
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Registered User
Joined: 8/24/2006
Posts: 46
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Hohnady
I like your explanation on entry point. How about maximum stop loss? How you set this parameter and how do you set trailing stops when the price goes in your favor?
Thank you
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Registered User
Joined: 8/24/2006
Posts: 46
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Fpetry
Thank you for your explanation.
Quote:
“Then place my stop just underneath the old resistance which is now new support”
Your minimal stop loss is based on which criteria?(price? % volatility? or % of portfolio)
Quote:
How often do you experience (10 %gains)? I was told to take my first 1/3 or 1/2 at (+3%) and then move the stop above buy price to brake even. At best I have had 6 to 10% gains in the total trade with this method. Should I wait longer in my trades? And if so how long do you wait to get to these gains (20 -25%)? If the trade is moving sideway, do you get out and trade a different stock?
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Registered User
Joined: 12/21/2004
Posts: 902
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I'm not as good on those, Amp, and I rarely use hard stops once I'm established in a position. As far as maximum stop loss goes - depends on how long I plan on holding the stock and how its longer view (weekly, monthly) charts look. I'll tolerate a substantial hole if the long range chart pattern looks good and I plan on holding the stock long enough for it to play out - but most times I'm just looking short term and I'll dump and move on as soon as the trend indicates it's fading.
On the rare occasion that I do place trailing stops, I use the low of the previous day method.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I use support areas. this is why I tend to favor consolidations of various forms.. Usually under the consolidation minus .25. I don't include any whicks initially but as a stocks moves up if I haven't taken proffits on it yet, and it forms another suport level i'll move the stop only when the support is finished. If price begins to move with momentum or faster than expected i'll start moving up to the bottom of daily candles.. large multi point candle i'll eaither take it the next day with a stop slightly under the close and a limit at the previous days high (suprising how often I get that price on exit, There were times when i was in the top 1/3 of a tail for a hanging man). OR move the stop to intra day suport.
Fixed percentages dont work well in this market. In the late 90's allot of people were using them sucessfully... but that was a completely different market action.
though I did test exits with Backscanner and it seemed liek the best average for trailing stops was about 8.5%. But that was on works in progress eventually i'd replace it other sell criteria. But with trailing stops I found acording to backscanner that any tighter and returns fells as stocks were prematurely exited and to much bigger and when stop were hit losses were bigger. the returns on % bases stops were pretty below average.
On the other hand ... you personoal risk tollerance plays a factor...If you want to try a stock but can only stand the thought of 'x'% loss then that is it... but you'll expose your self to more false starts and whipsaws.
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Registered User
Joined: 8/24/2006
Posts: 46
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Hohnady,
I tried to use your suggestion on using the SMA to bounce the price off. What time frame do you use? Is it fixed 3 ,6, 12 months?
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Registered User
Joined: 10/7/2004
Posts: 2,126
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The same old song. I have no idea how many times i have seen this same old question.
I have to wonder so, if you are trading, how can you possible have this kind of questions surfacing up.
If I was a mechanic, would I be asking - Where do I install the spark plug in the engine or in the exhaust?
That seems bounded for trouble - you really need to know the basics well before you put your knowledge to work. If not the lesson will be exponentially expensive.
Now you ask hard or flexible. What is your time frame?
You mentioned 0.5% stop - I say it will take you out before you blink your eyes. You can expect a trade to breath on that kind of room.
What time frame? what equity? Have you look at the equity ATR? There are so many factors.
Did you consider derivatives to truly protect your investment?
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Realize that your stop method goes hand-in-hand
with your profit method.
A day trader typically taking large positions for
small (pricewise) gain. Cannot tolerate large
drawdowns.
A trend trader taking intermediate to long-term
positions. Where profits may range from 10% to 40%.
Can typically withstand larger stop losses. (6% to 10%)
The general rule of thumb. The quicker you take profits
the "tighter" your stop should be. The longer you "let it
ride" the larger your stop losses can be.
Thanks
diceman
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Registered User
Joined: 12/21/2004
Posts: 902
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QUOTE (amp39) Hohnady,
I tried to use your suggestion on using the SMA to bounce the price off. What time frame do you use? Is it fixed 3 ,6, 12 months?
It's whatever the length of that stocks's current trend is - for most stocks right now it will be their behavior since the March 5 bottom. And it won't necessarily be the 13ema - might be the 20 or 26 or even the 50 - each stock is different.
I gernally start with a daily 3 month view (no idea what zoom level that is) and then expand to get a bigger picture if I see something interesting - but you want to judge how predictable the stock's current behavior is for entry, so you want to stay fairly close to the present to see how it's currently behaving and interacting with support.
I don't have access to TC2007 at work here, so I can't pull up any good current examples, but look at NXST during the months of March and April. Or check out TRA from about mid-December to mid-March, but especially in January which was my entry point.
I don't want to get into the mathematics, but my understanding is that the EMA is a much more stable moving average than the SMA because the EMA formula gives more weight for more recent data. Say that you have a 26 day sma and you have a huge price jump on one day. It will affect the 26 sma by 1/26 weight on the day it occurs, of course, but it will also affect the 26sma in exactly the same weight 26 days later when it finally drops out. The EMA formula gives that one data point less and less weight to the total formula the more it recedes into the past. If you're evaluating something happening now, wouldn't you rather work with a formula that gives more weight to the more recent data rather than giving equal weight to data X days ago? So you might want to give the ema's a try for this rather than just sticking with the sma's.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Plot in the top window :
ABS(L>XAVGC13ANDL1<XAVGC13.1)*L
As a custom indicator. ( not percent true )
Select : "plot using price scale"
This will plot a line to the low. When yesterdays
low was under the 13 bar expmav and today's is
above it.
The 13 (both of them) can be changed for different
expmav lengths.
Thanks
diceman
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Registered User
Joined: 2/8/2006
Posts: 73
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What about the bid and ask price? What if our stop loss is within the margin of these two, is it not in danger of being stomped out by the Market Maker?
Aslan007 
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Aslan007 your statement is nonsense. Are you confused about the use of level III to see the most inmediate levels of support and resistant.
YOu can use that, but only if you are moving very fast in and out of your trade (scalping) for the rest of the time frames it would be worhtless.
Most liquid stocks only have a spread of .01 so how is your stop going to be in betweeen. YOu cannot place limmit under the cent level. Marketmakers can so.
Still even if the spread was greater than .01 the market maker could quickly change that by lowering his ask, and that in retrospect would lower the bids.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Bigblock, you remind me of Mike tyson, ready to take on the whole world. We are not all trading experts like yourself, and believe it or not there are successfull traders that do not use (derivatives). you should try a little diplomacy in your interactions with the new traders that are only trying to learn something new.
Now I will give my veiws on using stop losses, wich I am sure that you will find fault with. My thinking is more in-line with Scottnlena. If you buy near a good support level then you will decrease risk and increase reward. Just put a hidden stop loss right under said support. And as you get further into profit then you can widen that stop loss.. I have made this example.
Good luck
Apsll..
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Sure apsll I agree with you - if you buy an uptrending stock at trend support you better your risk/ reward ratio, and viceversa for an downtrending stock. Still you get no real protection, you limit your risk. There is a difference. By the way, your chart looks really pretty. I like it.
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Registered User
Joined: 2/8/2006
Posts: 73
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BigBlock
I don't know if you understand what I mean. If you put a trade in for an ask price at 15.00$ and then put in a stop loss at 14.50 and the bid is 14.50 most likly the tread will happen. Or am I wrong?
We are friends here so keep it nice....
Aslan007
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Registered User
Joined: 8/24/2006
Posts: 46
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Hohnady,
Got it thanks.
Scottnlena,
I like this part
“and it forms another support level i'll move the stop only when the support is finished” Never thought it that way. Thank’s for your contribution.
Diceman,
I like your short and clear explanations of the concepts and thank you for the custom formula; it is neat. Sorry for asking, but how this applies to stops or are you giving me this formula in reference to
Hohnady first posting?
“I am entering a stock that has a history of bouncing off its 13ema, I want to enter as close to the 13 ema as possible. I also want to place a hard stop under the 13 ema.
You are a great teacher
BigBlock,
“The same old song. I have no idea how many times i have seen this same old question.
I have to wonder so, if you are trading, how can you possible have this kind of questions surfacing up. If I was a mechanic, would I be asking - Where do I install the spark plug in the engine or in the exhaust?
BogBlock!
I thought you were a professional. I hope for your sake you are not as sarcastic with your customers on your financial trading site. Also as a professional you should learn how to read carefully before making comments!
I quote:
Other sources claim that a good initial stop is 0.5 % below the lowest low of the previous day or two which ever is the lowest. “ I did not say .5% below the purchase price”.
Your quote:
You mentioned 0.5% stop - I say it will take you out before you blink your eyes. You can expect a trade to breath on that kind of room.
Of course I trade, but I have yet to find one book or two people that agree on this subject. I was not born a mechanic, but if I studied hard I am be able to design a better engine yet. Learning is a never ending process. “It expands the horizon of our mind and enlightens our soul.
Thank any way for your useless contribution on this subject.
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Registered User
Joined: 8/24/2006
Posts: 46
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Apsll,
Hey thanks you said it better than I. “You should try a little diplomacy in your interactions with the new traders that are only trying to learn something new”.
I too think that Scottnlena has a good point about using the support level and specially his point “move the stop only when the support is finished”. This forces the trader to wait that a new level is reached before moving the stop. Therefore increasing the chances for greater gains.
Over and out
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Ok folks! I apoligize if I sounded kind of rough on my comments - it wasn't my intention to intimidate but to raise concern for those who I thought are trader and investors and may be about to lose their shirt. I guess I assume everyone has a level of expertise when they get here. I guess that everyone is trading or investing once they get here. After all why pay a montly fee for great software that is not really being used in the real markets for trading or investing purposes.
Some comments just puzzle my mind, and make easy for me to see that some folks do not have a clue (please don't take this as an insulting action)per example: "BigBlock
I don't know if you understand what I mean. If you put a trade in for an ask price at 15.00$ and then put in a stop loss at 14.50 and the bid is 14.50 most likly the tread will happen. Or am I wrong?
We are friends here so keep it nice.... "
No I really don't understand - it makes no sense.
Now, anyone with even limited experience in the markets should know that the above is a wonderland scenario - Have you ever seen a .5 spread?? I haven't. So that is never going to happen why? Traders would be buying at 14.51 and selling at 14.99. The market maker is not that stupid belive me.
So should I warn this person that his knowledge is not addecuate to be in the markets, and that the penalty for this condition could be of proportional size, or should I be nice and ignore by telling him something that he probably in his level of expertise won't understand, and let him swim in a sea full of sharks.
Now I don't get pay to be specific about specific things here, but for the most part I think that when I speak you catch my breeze. It is up to you to get yourself up to pace; you can do that by studing books (my favorite), by seminars, by courses, etc, and then practicing in real situations (not paper).
I may elude to a fact, scenario, or else but not have the inclination or time to explain it.
I have over 15 yrs of experience on my back as an investore and trader. Probably excluding the Wordens I have been already were you are now or will be in the future as far as trading the markets go. I can give you good hints every know and them, but I will not spell it out for you. You need to do your homework.
I wish someone when I started slapped me in the face every once in a while, and through me some food for thought. It would had probably save me a lot of bumps along the way. It is hard to learn, and to take criticism which eventually helps build a better you.
Now as for the Stop situation - Many investors think that the solution to cutting losses is to use a stop loss order, which is set to trigger when the stock price moves down about 10% below the purchase price (general scenario). BUT there are two major problems with the stop loss approach:
1 - If the stock gaps down below your stop you will be out of luck. If your stop is limit then your stop won't even execute.
2 - Soon after you purchase a stock, it pulls back just enough to trigger the stop loss and then rebounds to a 15 % or higher gain. Ultimately you are taken out with losses and will miss the opportunity to make a profit.
Sounds familiar??
The solution is in derivatives, which I am not going to explain here. I can say that for a fraction of what you will pay if you stop is trigger you can insure your trade for x amount of time.
And please, please don't get me wrong. I am not saying don't use stops. If you are going to trade you better have at least stops. But you can do better than that.
If you care enought about your money, you will then take the time to study derivatives, if you don't you can expect a bumpy road ahead. Belive me I have already driven that route.
And that is as far as I going to go here.
good luck
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Amp39, A good pattern to look for as a new trader would be what I call a stair step chart pattern. Each new step up will creat a new support level in which to move your stop loss to.
I hope this chart is helpfull..
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Registered User
Joined: 10/7/2004
Posts: 2,126
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amp you still haven't said - stock in question, entry point, or time frame. I am sure that would help in resolving your question
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Registered User
Joined: 2/8/2006
Posts: 73
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Opps, looks like big block made a mistake! The ask price is always higher than the bid price.
What this means is if you are buying the stock you pay the ask price (the higher price) and if you are selling the stock you receive the bid price (the lower price).
Aslan007 
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Yes Aslan you are finally getting it. If you want to get in a stock now - you pay the ask. If you want to sell the stock now the you take the bid.
Yes the Ask is always higher than the bid.
If you want to buy a stock at the bid you may have to hang around for a while, but yes it could be done too. I am not sure what the deal is.
good luck
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Registered User
Joined: 12/2/2004
Posts: 1,775
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QUOTE (amp39) Fpetry, your minimal stop loss is based on which criteria?(price? % volatility? or % of portfolio)
How often do you experience (10 %gains)? I was told to take my first 1/3 or 1/2 at (+3%) and then move the stop above buy price to brake even. At best I have had 6 to 10% gains in the total trade with this method. Should I wait longer in my trades? And if so how long do you wait to get to these gains (20 -25%)? If the trade is moving sideway, do you get out and trade a different stock?
Good questions amp39, I'll try to answer. My stop loss pt. is based purely on price, and that price will always be a few cents under support. I'd say roughly that most of my stops are about .20 under support, sometimes more, but rarely less, depending on general volatility of the particular stock which is easy to see on a daily chart. I want the stop tight...if I'm wrong I can buy back, and in fact have done that several times with success. I try to watch stocks closely intraday so I can buy them early as they're breaking out of resistance, hopefully not more than 5% above breakout level. For instance if resistance on stock xyz is 20 and price moves to about 20.20 with increased volume, then I buy right there at 20.20. If price falls to about 19.80 that's where I'll sell as that would be my stop loss. In this scenario I didn't bother to ponder the percentage loss, but it turns out to be a .40 loss, or 2%. If I bought the breakout at 20.50 instead of 20.20, I still keep the same stop at 19.80. If I buy at the maximum above breakout that I think is reasonable, about 5% or 21, my stop stays at 19.80 and if hit I take about a 6 or 7% loss.
I experience plenty of 10%, can't give you percentage as a lot of times those gains come back in, sometimes go higher, and all inbetween. One rule though is that once I do have a 10% gain to not let it turn into a loss...move stop up to at least breakeven or maybe for a small gain. BTW, my stops are not hard stops but audible/visual alerts I set on my trading screen. If stop is hit I watch for a minute or more to see if a rinse job took out some stops on low volume and if price recovers quickly I stay in, but quickly out if it's hit again. I also sometimes will wait til end of regular hours to see how price ends up. Sometimes I end up stopping out a few cents below original placement, sometimes higher, but it usually averages out. Another pt. to consider is size of position. If I have a small 1/3 size position I may place it a bit looser, if a full size position i will immediately sell a portion as soon as stop is hit and wait to see if price recovers enough so I don't end up selling all. Often times after I have a full position in a stock I will place two or three stops, especially after I have a good gain going, say 20% or more. As you can see one can be quite creative with stops. The main thing is to be disciplined and logical about it. In the end money management is a trader's most important skill.
After I buy a stock and have a gain going regardless of percentage I will hold it as long as stop is not hit or pattern doesn't start to deteriorate. I let the chart tell me when it's time to get out and/or my stops get me out. "Why sell a rising stock?" That's a quote from Nicholas Darvas in his famous stock book.
Depends on trading style but I never take a profit at 3% as a stock is rising. I want to take my first profit at 20%, if price doesn't get that far then I may eventually be forced to take 3%, but it's certainly not my plan when I buy.
Good luck amp39, you have good questions and I enjoy the challenge of answering them in a helpful way.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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All;
I suggest you learn to love BigBlock's brusque approach; it's great practice for the way the markets will treat you. BigBlock is that drill sargeant who cares enough to kick your butt during boot camp so you can survive when they go live fire. (And I speak from experience, he's ripped me a fresh one once or twice...remember, BigBlock, when I went brain dead and was calling oversold overbought? You wouldn't let me off the hook. Pretty funny really.)
I don't trade like BigBlock; but I'll tell you this, when he's talking, I'm listening. (And, frankly, I aspire to learn options, derivatives and all the other stuff he talks about...just haven't had time to learn them well enough to use them yet...and I'm successful enough doing what I do that I can safely be out there. But he's right, we should all learn what he talks about.)
The markets couldn't care less about you and won't bother telling you they just raped you. BigBlock cares enough to take his time to share his vast knowledge here. I suggest you learn to take the heat or get out of the kitchen. (Wow! Did I just say that?)
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Registered User
Joined: 10/7/2004
Posts: 2,181
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amp38 et al;
Some other discussion on stops here:
http://www.worden.com/training/default.aspx?g=posts&t=21316
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Registered User
Joined: 1/28/2005
Posts: 6,049
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amp39
Yes it was related to hohandys "bouncing
off the mav".
I used yesterdays low under the mav and
today's low above to define "bouncing".
Thanks
diceman
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Registered User
Joined: 8/24/2006
Posts: 46
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May 23, 2007
Apsll’
Yes a picture is better than a thousand words. Thank you for taking the time to post it.
Tobydad,
Thank you I printed this post.
Diceman,
Thanks I have implemented the formula.
BigBlock,
I do appreciate your authority in the trading arena. 15 years in the trances I am sure with many deep scars. Your bullish reactions for the good of humanity is well taken but, please tone it down.
I never mentioned a stock because there was not a specific stock or case that I was asking clarification for. I simply wanted to stimulate a discussion that could have lead to the answer I was seeking. It was great tread and I received a lot of valuable suggestions from some great people, but still not the answer.
Some books state that violating the maximum stop is a cardinal sin. Other state to be flexible. “Maximum” was specifically related to capital conservation. I am told that you should never risk more that a percentage of your total portfolio for every trade. For an example I will use a portfolio of $20,000 and a max loss of 1% per trade in this case would be $200. I buy a stock with good fundamentals “ a good stock” and place my max stop at a % equal to $200, but I bought it at the wrong time let’s say after the news of a good quarter. The price goes up some and then it starts to drop. Buy the end of the day, the price has reached my stop and if I do not change it I will be out. Now because I know is a good stock I rationalize and lower my stop, but I just allowed myself to lose even more money.
So is Maximum stop loss the cutoff point to stop bleeding therefore is rigid? Or can it be flexible based on criteria XYZ. If so which criteria? Maybe the answer I am seeking is in your suggestion?
“If you care enough about your money, you will then take the time to study derivatives” I do not expect you to teach me derivatives, but could you point me in the right direction where to read this subject.
Good luck to you also.
Amp39
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Amp39, I am not saying to forget about derivatives, but for a new trader (IMO) they are to risky. I am asuming Bigblock, and I hope that you will correct me if I am wrong, that by derivatives you are refering to Options. They are complicated to use (for the inexperienced) and if conditions are not right, (even though they are consider cheap insurance to hedge your possition), then they could expire worthless.
What if you are in stock XYZ and you are long in your possition, Now you want to hedge your bet that the stock will move up by using Options. What if the stock lingers or consolidates for months neither progressing up nor down. There is nothing to lose by holding your long possition in this case but your options not performing as planned will cost you.
Now Options in the hands of very experienced traders are very usefull and profitable, but if a new trader instead will focus on being on the right side of the trend and the trade then there will be no need for these derivatives, again (IMO)..
Bigblock I know that your going to have plenty to say about this, so I will concede to you right now that My knowledge of Options is very limited and I am aware that there are many ways to apply their use. But for a begining trader I am not sure that it is a wise early step for him to take.
Of coarse that will be up to him. My Intent is to give you friendly advice Amp39 and that is all, Options are a good tool for experienced traders..
Apsll...
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Registered User
Joined: 4/18/2005
Posts: 4,090
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AMP39
I know exactly what you are saying. And depending on your entry and exit fees I feel that there is philosophic aproach to the idea of moving them. I NEED the rigidity and MUST stick to the plan.. if the plan fail I can make a new plan. Particularily since I only pay 1.00 average each way for a trade. If I get out at twenty and price falles to 18.. then gives an entry signal that is valid.. I guess you could say that I only realy lost the $2.00 to get in and our the first time. Which was a capital preservation decision I made as a plan before going in. At the time of planing I wasn't interested in holding the stock below the stop price because there was probably somethign wrong.
EX: AEHR - I bought on 3/19 considered taking proffits and decided that i'd hold throughthe next correctio nto see if I could get more.. the next correction came as a deeper suprize than I expected...I left my stop under $5.25. I read the release and it didn't seem that bad.. why the selling could be institutional selling on good news. So I held my stop there.. Then the RED BOP started and indicators started to look bad and the price slide was prety painful... I moved my stop up to the low of 4/23 on the logic that I probably need to get out and preserve capital and that further downside was enivetable. I was right... by only a few cents. Had I left the order open I would still be in it.. and breakeaven if not in proffit for at least a more graceful exit.
Also BEBE The week of april 11 I bought inot the little consolidation .. with a tight stop under the low three days prior... not the smartest move. I had been gettign bloodied on my picks and tightening stops probably only exasperbated the problem.. the next day Price gapped down and recoverd.. talk about frustrating.. BUT I NEVER move stop down.
I did that ONCE also. I bought in early 06.. posibly even before the split gap... need to check my records.. but I refused to take a loss on it so I moved my stop down and bought more.. ....... twice. When I couldn't take it any more I wasn't just skint.. I was flayed and fed to the dogs. That is my biggest loss and a four letter word at our house.
NOW Imay actually buy BEBE againsince it looks like the previous gap was a shake out to get rid of the whimps.. like me. Actualy it dosent fit newer criteria that I require of entries now but other than that .. i'd consider it again now..
However if after 3-4 straight losses I keep getting it wrong I black list the stock for some time.. I clearly don't have a sense of it and i'd be better off trading one that i'm more in tune with. I once traded AAPL 11 times and got it right 3 times in the same year. Clearly I had some "wrong thinking" going on there. Now I can't afford it but I figured to stop trading it would improve my average by that merrit alone. A stock that give me a 20% chance of getting them right aren't good odds. AKAM for most of 06' was the inverse of that I generally got it right which gave me great confidence and brought more good decisions.
Amazing how sucess breeds sucess in trading and failure starts a snowballing spiral that make one want to reevaluate teh "zerro sum risk enviroment" questions.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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sory the dirty word is BRCM that I bought but didn't say what..
got distracted mid sentence.
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