From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1940 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 Wednesday, December 12 2001 Volume 02 : Number 1940 In this issue: Re: [CANSLIM] clarification Re: [CANSLIM] stacking the odds in my favor-buying before the pivot point RE: [CANSLIM] Leader's List Re: [CANSLIM] Leader's List Re: [CANSLIM] SOME FEEDBACK NEEDED! Re: [CANSLIM] Dangerous Words RE: [CANSLIM] clarification Re: [CANSLIM] clarification ---------------------------------------------------------------------- Date: Wed, 12 Dec 2001 14:02:27 -0600 From: "Katherine Malm" Subject: Re: [CANSLIM] clarification >>If you put 7-8% of your trading capital > at risk on any one trade Now that I've been mulling over your comment, it begs another question. Are you suggesting the *total* monies invested in a trade are "at risk"? Or the amount which you've specified in downside stop-loss protection as "at risk."? Katherine - ----- Original Message ----- From: "Tangen, Eric" To: Sent: Wednesday, December 12, 2001 1:46 PM Subject: RE: [CANSLIM] clarification > Welcome to the club! Breakouts are a high risk and high reward strategy - if > you're batting .500, that's pretty darn good. You should expect 40% success > at finding successful breakouts long-term. > > I just have to get this off my chest for the new subscribers...WON's 7-8% > stop below the pivot is a technical stop. It is a rule of thumb based on > volatility in the handle region before a stock takes off. > > It is NOT A MONEY MANAGEMENT STOP!. If you put 7-8% of your trading capital > at risk on any one trade, you will eventually pay some really serious Wall > Street tuition on the path to becoming successful trader. > > WON's work has virtually nothing in the area of money management (what he > does say is just plain outdated...by 5 stocks with 100k...more appropriate > to an era of high commissions and lower volatility). > > Tharp's books are the best (only?) work in this area and should be required > reading before you head out to the great casino that is Wall Street. > > ERIC TANGEN - - - -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: Wed, 12 Dec 2001 18:44:36 -0600 From: Subject: Re: [CANSLIM] stacking the odds in my favor-buying before the pivot point This is a multi-part message in MIME format. - ------=_NextPart_000_001A_01C1833D.0C3E55A0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable katherine, thanks again for responding. i guess this is kind of boring = subject matter since no one else has responded. someone yesterday had = the subject stacking the odds in my favor, so i thought i throw my 2 = cents worth in, since its important to get in as close to the pivot = point as possible. yes the KKD trade was a limit order since i did not = want in over 2% of the pivot point. its important to play it close to = the vest during this time period. on the ORLY trade, it was a gap up = heavy volume opening. prices shot up through the pivot. but i had placed = a limit order before the pivot and got in at a good price. david ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 12, 2001 1:32 PM Subject: Re: [CANSLIM] stacking the odds in my favor-buying before the = pivot point >>on 11/14/01 i tried to buy KKD at the 38.25 pivot point-didn't get = executed Aside from the due diligence aspect of KKD, I'm guessing that if it = wasn't executed that you placed a limit order? If so, and you're placing = trades for market open rather than real time during the day, I think a = buy-stop-limit is better. But I'm sure there are others on the list will = have other opinions on this. There was a rather lively debate going on = about KKD recently, so it might be worth a trip to the archives to see = what people were saying about this one. In general, KKD had both = technical and, depending on your point of view, fundamental problems at = that point. >>on 12/5/01 executed ORLY before the pivot point of 34.00 on gap up = fast trade Forgive me, as I know you were in a hurry when you wrote this, but I = don't quite understand. Did you place a market order for open? Did you = place a buy-stop or limit order for market open? Or did you buy earlier = in the handle before the gap up B/O? I'm not completely sure what it is = you're asking about this one! Katherine ----- Original Message -----=20 From: camelot.homes@charter.net=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 12, 2001 1:18 PM Subject: Re: [CANSLIM] stacking the odds in my favor-buying before = the pivot point katherine, this was a hypothetical. i didn't look at the PECS chart. = here is 2 recent real trades that i did. on 11/14/01 i tried to buy KKD = at the 38.25 pivot point-didn't get executed, the price jumped past the = pivot point. on 12/5/01 executed ORLY before the pivot point of 34.00 on = gap up fast trade. i am sorry about about my poor writing, don't have = much time, have a corporation to run. david ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 12, 2001 10:02 AM Subject: Re: [CANSLIM] stacking the odds in my favor-buying before = the pivot point David, I might be misunderstanding your "32.50" pivot as an intended = hypothetical here. But let me answer based on the PECS chart itself: (1) The cup starts on 7/23 at at high of $27.45. The correction = took it as low as $12.50. That's about 54.5%, a little deep, but we'll = write that off to 9/11. It traveled up the right side of the cup and the = high of the handle was set on 11/1 at $26.82. There's one troubling high = volume day in the handle, but let me set that aside for the moment. That = means that the pivot is set and the buy point is at $26.92. The proper = B/O is then 11/14 when it gapped open. That day the volume was 1.8m = shares, about 3.5 times average. What that means is that you're already = too late at 32 to 32.5. By then, the stock's already moved almost 19% = from the B/O. An entry here would be an extended entry into the stock. = An entry here would also have you sitting today on a round trip ride. (2) So let's focus on the other question, which is "should I buy = early?" This is probably a great example. Let's say you're watching the = cup form and you decide to enter as it reaches near the old high on the = left. Let's say it hasn't yet formed a perfect handle. Let's say on = about 11/5 or so, only a few days in. Let's enter at the close of the = day at 25.99. Look what happens the next day. Big down day on big = volume. Low of the day? 21.69. Down 16.5% from your entry. Close of the = day? 22.85. Down 12% from your entry. It would be easy to rationalize = that by saying "But the next day it reversed and later the stock went on = to breakout, so you would have made money." But how can you know that is = going to happen on 11/6? You don't, and stop loss rules, if you had = risked the early entry, would have at least kept you out with a 7 or 8% = loss. Nearly 1/2 the loss of the low of the day. Hope that answered the question you had in mind. Katherine ----- Original Message -----=20 From: camelot.homes@charter.net=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 12, 2001 11:48 AM Subject: Re: [CANSLIM] stacking the odds in my favor-buying = before the pivot point katherine, thank you for your answer. i didn't really ask the = question right. i am actually talking about a fast market in a stock = like PECS in the past. The stock has formed a nice cup and handle, the = technicals and the fundamentals are very good. the stock gaps up at the = opening, on very heavy volume, and the price of the stock goes up very = fast. let's say the pivot is 32.50. Since the accumulation is so fast, = that instead of being able to buy around the pivot point, ones execution = might come back 1-2% higher.It looks like to me in this instance, that = buying before the pivot might be a good idea..Lets say maybe buying at = 32.00 to 32.50. What do you think? david ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 12, 2001 6:14 AM Subject: Re: [CANSLIM] stacking the odds in my favor-buying = before the pivot point Hi David, I see there hasn't yet been a response to your questions. I = was sure this one would draw some discussion. As I don't know your own level of experience with CANSLIM and = investing, I thought I'd answer this from a more generic point of view. (1) The idea behind waiting for a good stock to form a solid = base and then break out on volume is to identify that magical point at = which Demand outstrips Supply and Price is pushed higher--essentially = the old Supply/Demand curve from economics class. Assuming the lion's = share of sellers have been exhausted and the stock is one that people = would wish to own, the theory is that any additional demand for the = stock will push the price further. In order for the Price to continue = on, the underlying fundamentals that create value in the company have = got to be sound. So from this point of view, waiting for the B/O is = stacking the odds in your favor. (2) The statistics on B/O's from various technical formations = can be measured, but as you notice in our discussion the other day, the = studies we were looking at in Bulkowski's book make no preselection = based on fundamentals, as CANSLIM forces us to do. Even still, there are = still odds that B/O's will fail. It's just the way it is. (3) If you are extremely practiced and confident in CANSLIM = candidate selection and can build a sound argument for the company and = its potential, it is possible to make an early entry. Afterall, = *some*body is buying it on the right side of the cup. Even still, it is = less risky if the entry comes on a major change in trend or at a point = that is very near substantial recent support. I'm not advocating this, I = think even the best of the best get whacked when they try to do this. = But more importantly, I don't believe that anyone who hasn't established = a long running track record of successful selection should do this at = all. Just way too risky. Katherine ----- Original Message -----=20 From: camelot.homes@charter.net=20 To: canslim@lists.xmission.com=20 Sent: Tuesday, December 11, 2001 6:31 PM Subject: [CANSLIM] stacking the odds in my favor-buying = before the pivot point one thing that might increase ones odds-is buying before the = pivot point is reach, if the stock has hugh volume, great technicals and = fundamentals. what do you all think??? david and also do any of you buy before the pivot point , if the volume is = hugh, and the technicals and the fundamentals are excellent, and = the stock is setting up to break out of a nice base pattern??? - ------=_NextPart_000_001A_01C1833D.0C3E55A0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
katherine, thanks again for responding. = i guess=20 this is kind of boring subject matter since no one else has responded. = someone=20 yesterday had the subject stacking the odds in my favor, so i thought i = throw my=20 2 cents worth in, since its important to get in as close to the pivot = point as=20 possible. yes the KKD trade was a limit order since i did not want in = over 2% of=20 the pivot point. its important to play it close to the vest during this = time=20 period. on the ORLY trade, it was a gap up heavy volume opening. prices = shot up=20 through the pivot. but i had placed a limit order before the pivot and = got in at=20 a good price. david
----- Original Message -----
From:=20 Katherine=20 Malm
Sent: Wednesday, December 12, = 2001 1:32=20 PM
Subject: Re: [CANSLIM] stacking = the odds=20 in my favor-buying before the pivot point

>>on 11/14/01 i tried to buy = KKD at the=20 38.25 pivot point-didn't get executed
 
Aside from the due diligence aspect = of KKD, I'm=20 guessing that if it wasn't executed that you placed a limit order? If = so, and=20 you're placing trades for market open rather than real time during the = day, I=20 think a buy-stop-limit is better. But I'm sure there are others on the = list=20 will have other opinions on this. There was a rather lively debate = going on=20 about KKD recently, so it might be worth a trip to the archives to see = what=20 people were saying about this one. In general, KKD had both technical = and,=20 depending on your point of view, fundamental problems at that=20 point.
 
>>on 12/5/01 executed ORLY = before the pivot=20 point of 34.00 on gap up fast trade
 
Forgive me, as I know you were in a = hurry when=20 you wrote this, but I don't quite understand. Did you place a market = order for=20 open? Did you place a buy-stop or limit order for market open? Or did = you buy=20 earlier in the handle before the gap up B/O? I'm not completely sure = what it=20 is you're asking about this one!
 
Katherine
----- Original Message -----
From:=20 camelot.homes@charter.net =
Sent: Wednesday, December 12, = 2001 1:18=20 PM
Subject: Re: [CANSLIM] = stacking the=20 odds in my favor-buying before the pivot point

katherine, this was a hypothetical. = i didn't=20 look at the PECS chart. here is 2 recent real trades that i did. on = 11/14/01=20 i tried to buy KKD at the 38.25 pivot point-didn't get executed, the = price=20 jumped past the pivot point. on 12/5/01 executed ORLY before the = pivot point=20 of 34.00 on gap up fast trade. i am sorry about about my poor = writing, don't=20 have much time, have a corporation to run. david
----- Original Message ----- =
From:=20 Katherine=20 Malm
To: canslim@lists.xmission.com= =20
Sent: Wednesday, December = 12, 2001=20 10:02 AM
Subject: Re: [CANSLIM] = stacking the=20 odds in my favor-buying before the pivot point

David,
 
I might be misunderstanding your = "32.50"=20 pivot as an intended hypothetical here. But let me answer = based on=20 the PECS chart itself:
 
(1) The cup starts on 7/23 at at = high of=20 $27.45. The correction took it as low as $12.50. That's about = 54.5%, a=20 little deep, but we'll write that off to 9/11. It traveled up the = right=20 side of the cup and the high of the handle was set on 11/1 at = $26.82.=20 There's one troubling high volume day in the handle, but let me = set that=20 aside for the moment. That means that the pivot is set and the = buy=20 point is at $26.92. The proper B/O is then 11/14 when it = gapped=20 open. That day the volume was 1.8m shares, about 3.5 times = average. What=20 that means is that you're already too late at 32 to 32.5. By then, = the=20 stock's already moved almost 19% from the B/O. An = entry=20 here would be an extended entry into the stock. An entry here = would also=20 have you sitting today on a round trip ride.
 
(2) So let's focus on the other = question,=20 which is "should I buy early?" This is probably a great example. = Let's say=20 you're watching the cup form and you decide to enter as it reaches = near=20 the old high on the left. Let's say it hasn't yet formed a perfect = handle.=20 Let's say on about 11/5 or so, only a few days in. Let's = enter at the=20 close of the day at 25.99. Look what happens the next day. Big = down day=20 on big volume. Low of the day? 21.69. Down = 16.5%=20 from your entry. Close of the day? 22.85. Down = 12% from=20 your entry. It would be easy to rationalize that by saying "But = the next=20 day it reversed and later the stock went on to breakout, so you = would have=20 made money." But how can you know that is going to happen on 11/6? = You=20 don't, and stop loss rules, if you had risked the early entry, = would have=20 at least kept you out with a 7 or 8% loss. Nearly 1/2 the=20 loss of the low of the day.
 
Hope that answered the question = you had in=20 mind.
 
Katherine
----- Original Message ----- =
From:=20 camelot.homes@charter.net=20
To: canslim@lists.xmission.com= =20
Sent: Wednesday, December = 12, 2001=20 11:48 AM
Subject: Re: [CANSLIM] = stacking the=20 odds in my favor-buying before the pivot point

katherine, thank you for your = answer. i=20 didn't really ask the question right. i am actually talking = about a fast=20 market in a stock like PECS in the past. The stock has = formed a=20 nice cup and handle, the technicals and the fundamentals are = very good.=20 the stock gaps up at the opening, on very heavy volume, and the = price of=20 the stock goes up very fast. let's say the pivot is 32.50. Since = the=20 accumulation is so fast, that instead
of being able to buy around the = pivot=20 point, ones execution might come back 1-2% higher.It looks like = to me in=20 this instance, that buying before the pivot might be a good = idea..Lets=20 say maybe buying  at 32.00 to 32.50. What do you think?=20 david
----- Original Message ----- =
From:=20 Katherine Malm
To: canslim@lists.xmission.com= =20
Sent: Wednesday, = December 12,=20 2001 6:14 AM
Subject: Re: [CANSLIM] = stacking=20 the odds in my favor-buying before the pivot point

Hi David,
 
I see there hasn't yet been a = response to=20 your questions. I was sure this one would draw some=20 discussion.
 
As I don't know your own = level of=20 experience with CANSLIM and investing, I thought I'd answer = this from=20 a more generic point of view.
 
(1) The idea behind waiting = for a good=20 stock to form a solid base and then break out on volume is to = identify=20 that magical point at which Demand outstrips Supply and Price = is=20 pushed higher--essentially the old Supply/Demand curve = from=20 economics class.  Assuming the lion's share of  = sellers=20 have been exhausted and the stock is one that people = would wish=20 to own, the theory is that any additional demand for the stock = will=20 push the price further. In order for the Price to continue on, = the=20 underlying fundamentals that create value in the company have = got to=20 be sound. So from this point of view, waiting for the B/O is = stacking=20 the odds in your favor.
 
(2) The statistics on B/O's = from various=20 technical formations can be measured, but as you notice = in our=20 discussion the other day, the studies we were looking at in=20 Bulkowski's book make no preselection based on fundamentals, = as=20 CANSLIM forces us to do. Even still, there are still odds that = B/O's=20 will fail. It's just the way it is.
 
(3) If you are extremely = practiced and=20 confident in CANSLIM candidate selection and can build a sound = argument for the company and its potential, it is possible to = make an=20 early entry. Afterall, *some*body is buying it on the right = side of=20 the cup. Even still, it is less risky if the entry comes on a = major=20 change in trend or at a point that is very near substantial = recent=20 support. I'm not advocating this, I think even the best of the = best=20 get whacked when they try to do this. But more importantly, I = don't=20 believe that anyone who hasn't established a long running = track record=20 of successful selection should do this at all. Just way too=20 risky.
 
Katherine
 
----- Original Message -----
From:=20 camelot.homes@charter.net=20
To: canslim@lists.xmission.com= =20
Sent: Tuesday, = December 11,=20 2001 6:31 PM
Subject: [CANSLIM] = stacking the=20 odds in my favor-buying before the pivot point

one thing that might = increase ones=20 odds-is buying before the pivot point is reach, if the stock = has=20 hugh volume, great technicals and fundamentals. what do you = all=20 think??? david
 
and also
 
do any of you buy before the pivot point , if  the = volume=20 is hugh,
and the technicals and the fundamentals are = excellent,=20 and the stock is
setting up to break out of a nice base=20 = pattern???
<= /BLOCKQUOTE>
- ------=_NextPart_000_001A_01C1833D.0C3E55A0-- - - - -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: Wed, 12 Dec 2001 17:44:27 -0800 From: esetser Subject: RE: [CANSLIM] Leader's List Thanks. I manually run through the charts of the list, and generate a weekly watch list of stocks with 7+ week bases, that look promising in the short term. I don't post that part since I feel the chart reading is very important for each person to do on their own. My goal was to do some screening that would give me a list of stocks that don't change very quickly. I do see some turnover each week, many based on group movements, but I also see many repeats. At 11:02 PM 12/11/01 -0500, you wrote: >Great list. Now if you could only find a way to highlight those that are >forming good bases, it would be indispensable :) > >> -----Original Message----- >> From: owner-canslim@lists.xmission.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: Wed, 12 Dec 2001 17:45:37 -0800 From: esetser Subject: Re: [CANSLIM] Leader's List Yes, and that's exactly what I do. There are also free programs that allow you to run through lists of charts quickly, I think bigeasy was one I used to use. At 08:53 PM 12/11/01 -0600, you wrote: >Dave, > >You can take a list like this and import it into DGO for a very fast review. >My thumb knows the spacebar well when flying through a list of stocks this >big! > >Katherine - - - -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: Wed, 12 Dec 2001 19:55:12 EST From: Gracephyll@cs.com Subject: Re: [CANSLIM] SOME FEEDBACK NEEDED! - --part1_7a.1f6b3ade.29495670_boundary Content-Type: text/plain; charset="US-ASCII" Content-Transfer-Encoding: 7bit Tom, As a newbie inthe investing world, I learn so much from your commentaries. I enjoy your insights. I still have so many basics to learn, and I find that you offer opinions and insights that help me to put things into perspective for myself. I use your comments on charts and basing patterns to learn by. Please DO continue and know that I appreciate your sharings and effort. Consider yourself hugged. Phyllis - --part1_7a.1f6b3ade.29495670_boundary Content-Type: text/html; charset="US-ASCII" Content-Transfer-Encoding: 7bit Tom,
As a newbie inthe investing world, I learn so much from your commentaries.  I enjoy your insights.  I still have so many basics to learn, and I find that you offer opinions and insights that help me to put things into perspective for myself.

I use your comments on charts and basing patterns to learn by.

Please DO continue and know that I appreciate your sharings and effort.
Consider yourself hugged.

Phyllis    - --part1_7a.1f6b3ade.29495670_boundary-- - - - -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: Wed, 12 Dec 2001 20:05:17 EST From: Spencer48@aol.com Subject: Re: [CANSLIM] Dangerous Words Katherine: How about-before its bankruptcy: "Buy Enron" jans In a message dated 12/12/2001 10:57:05 AM Eastern Standard Time, kmalm@earthlink.net writes: << I have been compiling a list of what I call "dangerous" words. Words that indicate emotion is overtaking rational expectations and decision making. Would you all be willing to add to the list? Incredible Unbelievable Go XXXX, Go Should (pretty much in any context) Have you bought XXXX? (Heard for the third time in 2 days) Everyone should have this in their portfolio (usually heard on CNBC) This stock is on fire (always heard on CNBC) Should I buy XXXX? (Heard from your plumber) The Fed is no longer important It can't lose It's a perfect stock It's a perfect company Katherine >> - - - -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: Wed, 12 Dec 2001 20:19:23 -0500 From: "Tangen, Eric" Subject: RE: [CANSLIM] clarification The latter....your risk is your buy price less the stop. Rule of thumb: that number should be 1% or less of your total trading capital. So if you want in on a more volatile stock, just buy less of it...but don't set the stop at 7-8% if the stock has a 10% daily trading range - another point HTMMIS doesn't address. Trading any system with a 7-8% risk for each trade is a receipe for disaster. The pros use a 1% limit. If (as in HTMMIS suggest) you split up your capital evenly amoung 5-6 stocks and used an arbitrary 7-8% stop loss, statistically, it would be very easy to get enough losing trades to loose all your money. The unspoken 40% reliability of the WON breakouts only makes this bad situation worse. I'm afraid that a quick reading of HTMMIS gives the impression that if you can identify the perfect C+H setup and all the other CANSLIM criteria are in place, you can get darn near 100% reliability of a breakout. I have a big problem with that. I'm not down on CANSLIM...just like people to know the reality of the situation. Your going for home runs here and home run hitters have a lot of strikeouts. ERIC TANGEN - -----Original Message----- From: Katherine Malm [mailto:kmalm@earthlink.net] Sent: Wednesday, December 12, 2001 2:02 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] clarification >>If you put 7-8% of your trading capital > at risk on any one trade Now that I've been mulling over your comment, it begs another question. Are you suggesting the *total* monies invested in a trade are "at risk"? Or the amount which you've specified in downside stop-loss protection as "at risk."? Katherine - ----- Original Message ----- From: "Tangen, Eric" To: Sent: Wednesday, December 12, 2001 1:46 PM Subject: RE: [CANSLIM] clarification > Welcome to the club! Breakouts are a high risk and high reward strategy - if > you're batting .500, that's pretty darn good. You should expect 40% success > at finding successful breakouts long-term. > > I just have to get this off my chest for the new subscribers...WON's 7-8% > stop below the pivot is a technical stop. It is a rule of thumb based on > volatility in the handle region before a stock takes off. > > It is NOT A MONEY MANAGEMENT STOP!. If you put 7-8% of your trading capital > at risk on any one trade, you will eventually pay some really serious Wall > Street tuition on the path to becoming successful trader. > > WON's work has virtually nothing in the area of money management (what he > does say is just plain outdated...by 5 stocks with 100k...more appropriate > to an era of high commissions and lower volatility). > > Tharp's books are the best (only?) work in this area and should be required > reading before you head out to the great casino that is Wall Street. > > ERIC TANGEN - - - -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: Wed, 12 Dec 2001 20:02:53 -0600 From: Subject: Re: [CANSLIM] clarification eric, i agree with you. these days i have been trying to hit singles and doubles. taking small profits and taking smaller losses. taking 7-8% loss to me is very unwise. show me a classic cup with handle chart now and i'll put it on my watch list. i don't believe AZO,CACI, ALLY, PECS, ect. were classics. - ----- Original Message ----- From: "Tangen, Eric" To: Sent: Wednesday, December 12, 2001 7:19 PM Subject: RE: [CANSLIM] clarification > The latter....your risk is your buy price less the stop. Rule of thumb: that > number should be 1% or less of your total trading capital. So if you want in > on a more volatile stock, just buy less of it...but don't set the stop at > 7-8% if the stock has a 10% daily trading range - another point HTMMIS > doesn't address. > > Trading any system with a 7-8% risk for each trade is a receipe for > disaster. The pros use a 1% limit. If (as in HTMMIS suggest) you split up > your capital evenly amoung 5-6 stocks and used an arbitrary 7-8% stop loss, > statistically, it would be very easy to get enough losing trades to loose > all your money. The unspoken 40% reliability of the WON breakouts only makes > this bad situation worse. > > I'm afraid that a quick reading of HTMMIS gives the impression that if you > can identify the perfect C+H setup and all the other CANSLIM criteria are in > place, you can get darn near 100% reliability of a breakout. I have a big > problem with that. > > I'm not down on CANSLIM...just like people to know the reality of the > situation. Your going for home runs here and home run hitters have a lot of > strikeouts. > > > ERIC TANGEN > > -----Original Message----- > From: Katherine Malm [mailto:kmalm@earthlink.net] > Sent: Wednesday, December 12, 2001 2:02 PM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] clarification > > > >>If you put 7-8% of your trading capital > > at risk on any one trade > > Now that I've been mulling over your comment, it begs another question. Are > you suggesting the *total* monies invested in a trade are "at risk"? Or the > amount which you've specified in downside stop-loss protection as "at > risk."? > > Katherine > > > ----- Original Message ----- > From: "Tangen, Eric" > To: > Sent: Wednesday, December 12, 2001 1:46 PM > Subject: RE: [CANSLIM] clarification > > > > Welcome to the club! Breakouts are a high risk and high reward strategy - > if > > you're batting .500, that's pretty darn good. You should expect 40% > success > > at finding successful breakouts long-term. > > > > I just have to get this off my chest for the new subscribers...WON's 7-8% > > stop below the pivot is a technical stop. It is a rule of thumb based on > > volatility in the handle region before a stock takes off. > > > > It is NOT A MONEY MANAGEMENT STOP!. If you put 7-8% of your trading > capital > > at risk on any one trade, you will eventually pay some really serious Wall > > Street tuition on the path to becoming successful trader. > > > > WON's work has virtually nothing in the area of money management (what he > > does say is just plain outdated...by 5 stocks with 100k...more appropriate > > to an era of high commissions and lower volatility). > > > > Tharp's books are the best (only?) work in this area and should be > required > > reading before you head out to the great casino that is Wall Street. > > > > ERIC TANGEN > > > > - > -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". 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