From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #1942 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 1942 In this issue: RE: [CANSLIM] clarification Re: [CANSLIM] clarification Re: [CANSLIM] clarification RE: [CANSLIM] clarification Re: [CANSLIM] clarification Re: [CANSLIM] stacking the odds in my favor-buying before the pivot point ---------------------------------------------------------------------- Date: Wed, 12 Dec 2001 21:57:46 -0500 From: "Tangen, Eric" Subject: RE: [CANSLIM] clarification Of course you are right...risk is the stop value itself...it is what you loose when your stop is triggered. It is what I mean but didn't say correctly. This is what happens when I try to communicate math verbally...the two don't mix. :) ERIC TANGEN - -----Original Message----- From: John Adair [mailto:xjadair@brightok.net] Sent: Wednesday, December 12, 2001 8:48 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] clarification Hi Erick If I am reading your post right correctly you would say your risk on a $50 stock with a $5.00 stop would be $50.00 -$5.00 or $45.00. If that is what you are saying I would not agree I would say your risk is $5.00 if I understand what Tharp suggests. Tharp then limits your risk to the 1% is based on that figure 1% ( 3% for the gunslinger) of your total capitol. John Adair - -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tangen, Eric Sent: Wednesday, December 12, 2001 7:19 PM To: 'canslim@lists.xmission.com' 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. - - - -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 21:16:27 -0600 From: Subject: Re: [CANSLIM] clarification eric, how do you get the 40% reliability of the WON breakout? david frank - ----- Original Message ----- From: "Tangen, Eric" To: Sent: Wednesday, December 12, 2001 8:57 PM Subject: RE: [CANSLIM] clarification > Of course you are right...risk is the stop value itself...it is what you > loose when your stop is triggered. It is what I mean but didn't say > correctly. > > This is what happens when I try to communicate math verbally...the two don't > mix. :) > > ERIC TANGEN > > > > -----Original Message----- > From: John Adair [mailto:xjadair@brightok.net] > Sent: Wednesday, December 12, 2001 8:48 PM > To: canslim@lists.xmission.com > Subject: RE: [CANSLIM] clarification > > > Hi Erick > If I am reading your post right correctly you would say your risk > on a $50 > stock with a $5.00 stop would be $50.00 -$5.00 or $45.00. If that is what > you are saying I would not agree I would say your risk is $5.00 if I > understand what Tharp suggests. Tharp then limits your risk to the 1% is > based on that figure 1% ( 3% for the gunslinger) of your total capitol. > John Adair > > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tangen, Eric > Sent: Wednesday, December 12, 2001 7:19 PM > To: 'canslim@lists.xmission.com' > 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. > > > - > -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: Wed, 12 Dec 2001 21:32:31 -0600 From: "Katherine Malm" Subject: Re: [CANSLIM] clarification Thanks for the explanation, Eric. There are many times when I look for recent support and it is below the 7-8%. I've always managed this by taking a smaller entry position and stretching my stop a bit, but didn't really think of it in the same way that you presented it. Much appreciated. I think I'll have to queue up Tharp on the reading list. Katherine - ----- 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". 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 22:41:05 -0500 From: "Tangen, Eric" Subject: RE: [CANSLIM] clarification The 40% number is an amalgam of a number of anecdotes from a few different sources. Its all word of mouth. No names to given protect the guilty. You can almost infer such a number from WON himself...I'd bet if you asked the big-O-man in a seminar he'd deflect the question to point out how much you are ahead having 1 big gain out of 2-5 trades. ERIC TANGEN - -----Original Message----- From: camelot.homes@charter.net [mailto:camelot.homes@charter.net] Sent: Wednesday, December 12, 2001 9:16 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] clarification eric, how do you get the 40% reliability of the WON breakout? david frank - ----- Original Message ----- From: "Tangen, Eric" To: Sent: Wednesday, December 12, 2001 8:57 PM Subject: RE: [CANSLIM] clarification > Of course you are right...risk is the stop value itself...it is what you > loose when your stop is triggered. It is what I mean but didn't say > correctly. > > This is what happens when I try to communicate math verbally...the two don't > mix. :) > > ERIC TANGEN > > > > -----Original Message----- > From: John Adair [mailto:xjadair@brightok.net] > Sent: Wednesday, December 12, 2001 8:48 PM > To: canslim@lists.xmission.com > Subject: RE: [CANSLIM] clarification > > > Hi Erick > If I am reading your post right correctly you would say your risk > on a $50 > stock with a $5.00 stop would be $50.00 -$5.00 or $45.00. If that is what > you are saying I would not agree I would say your risk is $5.00 if I > understand what Tharp suggests. Tharp then limits your risk to the 1% is > based on that figure 1% ( 3% for the gunslinger) of your total capitol. > John Adair > > -----Original Message----- > From: owner-canslim@lists.xmission.com > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tangen, Eric > Sent: Wednesday, December 12, 2001 7:19 PM > To: 'canslim@lists.xmission.com' > 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. > > > - > -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. ------------------------------ Date: Wed, 12 Dec 2001 21:52:24 -0600 From: Subject: Re: [CANSLIM] clarification eric, but how about the hugh returns that kacher, morales, ryan, kuhn have gotten in the past using the canslim system. i believe in readings WON gets a more modest 40% a year-of course i might be wrong about that. david - ----- Original Message ----- From: "Tangen, Eric" To: Sent: Wednesday, December 12, 2001 9:41 PM Subject: RE: [CANSLIM] clarification > The 40% number is an amalgam of a number of anecdotes from a few different > sources. Its all word of mouth. No names to given protect the guilty. > > You can almost infer such a number from WON himself...I'd bet if you asked > the big-O-man in a seminar he'd deflect the question to point out how much > you are ahead having 1 big gain out of 2-5 trades. > > > ERIC TANGEN > > -----Original Message----- > From: camelot.homes@charter.net [mailto:camelot.homes@charter.net] > Sent: Wednesday, December 12, 2001 9:16 PM > To: canslim@lists.xmission.com > Subject: Re: [CANSLIM] clarification > > > eric, how do you get the 40% reliability of the WON breakout? david frank > ----- Original Message ----- > From: "Tangen, Eric" > To: > Sent: Wednesday, December 12, 2001 8:57 PM > Subject: RE: [CANSLIM] clarification > > > > Of course you are right...risk is the stop value itself...it is what you > > loose when your stop is triggered. It is what I mean but didn't say > > correctly. > > > > This is what happens when I try to communicate math verbally...the two > don't > > mix. :) > > > > ERIC TANGEN > > > > > > > > -----Original Message----- > > From: John Adair [mailto:xjadair@brightok.net] > > Sent: Wednesday, December 12, 2001 8:48 PM > > To: canslim@lists.xmission.com > > Subject: RE: [CANSLIM] clarification > > > > > > Hi Erick > > If I am reading your post right correctly you would say your risk > > on a $50 > > stock with a $5.00 stop would be $50.00 -$5.00 or $45.00. If that is what > > you are saying I would not agree I would say your risk is $5.00 if I > > understand what Tharp suggests. Tharp then limits your risk to the 1% is > > based on that figure 1% ( 3% for the gunslinger) of your total capitol. > > John Adair > > > > -----Original Message----- > > From: owner-canslim@lists.xmission.com > > [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tangen, Eric > > Sent: Wednesday, December 12, 2001 7:19 PM > > To: 'canslim@lists.xmission.com' > > 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. > > > > > > - > > -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. ------------------------------ Date: Wed, 12 Dec 2001 22:06:35 -0600 From: "Katherine Malm" 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_0067_01C18359.439BDA60 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi David, I might just completely misunderstand what you did on the trades, so = bear with me.=20 On something like KKD, I'm not sure why you wouldn't have had an = execution with the limit on 11/14, as there was no gap open to go beyond = your 2% limit. If the trade was on the books for open, it should have = been executed. But if you placed a limit order during the day, the trade = might have been fast enough at the time for you to miss out. I'm not a = fan of limit orders for real time execution. I think if you want to buy = it, you place the market order and buy it. But again, that's only my = point of view. Another thing, if the stock is good and strong on B/O and = has good follow-thru after the B/O in subsequent days, buying up to 5% = or so of the pivot is of no consequence. A few percent from B/O vs. a = healthy 50% move is insignificant. But missing the trade because you = made an arbitrary limit decision is the same as losing money to = opportunity cost. I understand you're placing the limit on 2% above the = pivot to play it close to the vest, but I think there's other ways to = play it close to the vest that would garner profits and control risk at = the same time. A good stock that wants to move on does it. Looking for = strong stocks with strong B/O's is really more critical. As an aside, that reversal day on 11/15 would have had me taking some = off the table. That new high on low volume 11/19 would have had me out = altogether. So I think you should be happy you didn't get an execution. If I understand your ORLY order, you placed a limit order for some price = under the pivot of 34.00? This one worked out well due to the gap open, = but you were still buying on 12/5 on the gap open day. What if the gap = had been much bigger, say 4% above the pivot? Your 2% limit order would = still have missed it. Again, just something to think about when using = limit orders.=20 Also, it's still not clear to me whether you're placing live limit = orders or limit orders the night before for market open. If it's for = market open, would definitely use buy-stop at a minimum. That way as = soon as the stock hits your desired buy price, the order becomes a = market order. If you want to control the upside from the pivot, then = use a buy-stop-limit. But again, I'd give the stock room in case there's = a gap. A gap open on a base breakout is almost always a good thing. It's = especially good if it coincides with an earnings announcement. And it's not boring to me, anyway! Katherine ----- Original Message -----=20 From: camelot.homes@charter.net=20 To: canslim@lists.xmission.com=20 Sent: Wednesday, December 12, 2001 6:44 PM Subject: Re: [CANSLIM] stacking the odds in my favor-buying before the = pivot point 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_0067_01C18359.439BDA60 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Hi David,
 
I might just completely misunderstand = what you did=20 on the trades, so bear with me.
 
On something like KKD, I'm not sure why = you=20 wouldn't have had an execution with the limit on 11/14, as there was no = gap open=20 to go beyond your 2% limit. If the trade was on the books for open, it = should=20 have been executed. But if you placed a limit order during the day, the = trade=20 might have been fast enough at the time for you to miss out. I'm not a = fan of=20 limit orders for real time execution. I think if you want to buy it, you = place=20 the market order and buy it. But again, that's only my point of view. = Another=20 thing, if the stock is good and strong on B/O and has good follow-thru = after the=20 B/O in subsequent days, buying up to 5% or so of the pivot is of no = consequence.=20 A few percent from B/O vs. a healthy 50% move is insignificant. But = missing the=20 trade because you made an arbitrary limit decision is the same as losing = money=20 to opportunity cost. I understand you're placing the limit on 2% above = the pivot=20 to play it close to the vest, but I think there's other ways to play it = close to=20 the vest that would garner profits and control risk at the same time. A = good=20 stock that wants to move on does it. Looking for strong stocks with = strong B/O's=20 is really more critical.
 
As an aside, that reversal day on 11/15 = would have=20 had me taking some off the table. That new high on low volume 11/19 = would have=20 had me out altogether. So I think you should be happy you didn't get an=20 execution.
 
If I understand your ORLY order, you = placed a limit=20 order for some price under the pivot of 34.00? This one worked out well = due to=20 the gap open, but you were still buying on 12/5 on the gap open day. = What if the=20 gap had been much bigger, say 4% above the pivot? Your 2% limit order = would=20 still have missed it. Again, just something to think about when using = limit=20 orders.
 
Also, it's still not clear to me = whether you're=20 placing live limit orders or limit orders the night before for market = open. If=20 it's for market open, would definitely use buy-stop at a minimum. That=20 way as soon as the stock hits your desired buy price, the = order=20 becomes a market order.  If you want to control the upside from the = pivot,=20 then use a buy-stop-limit. But again, I'd give the stock room in case = there's a=20 gap. A gap open on a base breakout is almost always a good thing. It's=20 especially good if it coincides with an earnings = announcement.
 
And it's not boring to me, = anyway!
 
Katherine
----- Original Message -----
From:=20 camelot.homes@charter.net =
Sent: Wednesday, December 12, = 2001 6:44=20 PM
Subject: Re: [CANSLIM] stacking = the odds=20 in my favor-buying before the pivot point

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=20 my 2 cents worth in, since its important to get in as close to the = pivot point=20 as possible. yes the KKD trade was a limit order since i did not want = in over=20 2% of the pivot point. its important to play it close to the vest = during this=20 time period. on the ORLY trade, it was a gap up heavy volume opening. = prices=20 shot up through the pivot. but i had placed a limit order before the = pivot and=20 got in at 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=20 odds 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,=20 and you're placing trades for market open rather than real time = during the=20 day, I think a buy-stop-limit is better. But I'm sure there are = others on=20 the list will have other opinions on this. There was a rather lively = debate=20 going on about KKD recently, so it might be worth a trip to the = archives to=20 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=20 point.
 
>>on 12/5/01 executed ORLY = before the=20 pivot 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=20 for open? Did you place a buy-stop or limit order for market open? = Or did=20 you buy earlier in the handle before the gap up B/O? I'm not = completely sure=20 what it is you're asking about this one!
 
Katherine
----- Original Message ----- =
From:=20 camelot.homes@charter.net=20
To: canslim@lists.xmission.com= =20
Sent: Wednesday, December = 12, 2001=20 1:18 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=20 11/14/01 i tried to buy KKD at the 38.25 pivot point-didn't get = executed,=20 the price jumped past the pivot point. on 12/5/01 executed ORLY = before the=20 pivot point of 34.00 on gap up fast trade. i am sorry about about = my poor=20 writing, don't have much time, have a corporation to run.=20 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=20 buy point is at $26.92. The proper B/O is then = 11/14=20 when it gapped open. That day the volume was 1.8m shares, about = 3.5=20 times average. What that means is that you're already too late = at 32 to=20 32.5. By then, the stock's already moved almost 19% from = the=20 B/O. An entry here would be an extended entry into the = stock.=20 An entry here would also have you sitting today on a round trip=20 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=20 say you're watching the cup form and you decide to enter as it = reaches=20 near the old high on the left. Let's say it hasn't yet formed a = perfect=20 handle. Let's say on about 11/5 or so, only a few days in. = Let's=20 enter at the close of the day at 25.99. Look what happens the = next day.=20 Big down day on big volume. Low of the day? 21.69. = Down=20 16.5% from your entry. Close of the day? 22.85. = Down=20 12% from your entry. It would be easy to rationalize = that by=20 saying "But the next day it reversed and later the stock went on = to=20 breakout, so you would have made money." But how can you know = that is=20 going to happen on 11/6? You don't, and stop loss rules, if you = had=20 risked the early entry, would have at least kept you out with a = 7 or 8%=20 loss. Nearly 1/2 the loss of the low of the=20 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,=20 2001 11:48 AM
Subject: Re: [CANSLIM] = stacking=20 the 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=20 fast market in a stock like PECS in the past. The stock = has=20 formed a nice cup and handle, the technicals and the = fundamentals are=20 very good. the stock gaps up at the opening, on very heavy = volume, and=20 the price of the stock goes up very fast. let's say the pivot = is=20 32.50. Since the 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=20 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=20 think? 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=20 to 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=20 from 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=20 identify that magical point at which Demand outstrips Supply = and=20 Price is pushed higher--essentially the = old Supply/Demand curve=20 from economics class.  Assuming the lion's share = of =20 sellers have been exhausted and the stock is one that = people=20 would wish to own, the theory is that any additional demand = for the=20 stock will push the price further. In order for the Price to = continue on, the underlying fundamentals that create value = in the=20 company have got to be sound. So from this point of view, = waiting=20 for the B/O is stacking the odds in your favor.
 
(2) The statistics on B/O's = from=20 various technical formations can be measured, but as = you notice=20 in our 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=20 argument for the company and its potential, it is possible = to make=20 an early entry. Afterall, *some*body is buying it on the = right side=20 of the cup. Even still, it is less risky if the entry comes = on a=20 major change in trend or at a point that is very near = substantial=20 recent support. I'm not advocating this, I think even the = best of=20 the best get whacked when they try to do this. But more = importantly,=20 I don't believe that anyone who hasn't established a long = running=20 track record of successful selection should do this at all. = Just way=20 too 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=20 the 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=20 volume is hugh,
and the technicals and the fundamentals = are=20 excellent, and the stock is
setting up to break out of = a nice=20 base=20 = pattern???
<= /BLOCKQUOTE>
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