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Author Topic: Stage analysis with stop loss  (Read 12993 times)
denaliguide2
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« on: September 09, 2006, 12:26:17 AM »

Trailing stop losses are set according to the stocks stage of appreciation.

One must wait for a profit to develop, unless you simply automatically use a 7% stop loss. 
  I watch the technicals, specifically volume indicators.  I also give a stock 30 days to trace out a positive pattern.  After 30 days of initiating a postion, the lowest 10 or 20% of my positions are liquidated, by selling into strength.
The proceeds are then divided amongst the top 33 1/3% of the performers in my portfolio, or any candidate manifesting more strength AND potential than any in the portfolio [ one must always have replacements in the wings!].
  Once a stock starts moving, in Stage one (1) Basing, I use a loose stop to keep my profit, but also to avoid being stopped out in corrections.  This stop can be from 10 to 20% [ a trailing stop NEVER moves down, only UP].  When a stock progresses to Stage two (2) Upslope, trailing stops are tightened to no looser than 12-15%, perhaps as tight as 7% depending on ones observation of the nature of corrections, and the Beta of the stock.  Stage THREE (3) is Parabolic, skyrocket !  At this time the stock seems it CANNOT go down, BE Afraid, Be VERY Afraid, it is going straight UP.  As soon as I notice this stage I make my stop no looser than 7%, and as tight as 3%.
This helps get you out of BlowOff Moves with some profit intact.
  Patience and Vigilance ARE Required.
As most of us know, it takes a bit of time to get a profit from a postion, at least in the beginning.  Stage One (1) then could take from 30 days to a year.
Stage (2) seldom is shorter, sometimes longer.  Stage (3), the Wild Ride, is usually shorter than Stage (2).
 To recap: Stage 1 / 10-20%;  Stage 2 /7-15%; Stage 3 /3-7%.  I do not use time to set stops, I use it to prune out Non-Performers.  Thirty day reviews is where I start to select stocks to be culled.  Twice weekly reviews would be sufficient to determine where your stock is staged.

Good Luck to all

DG2
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denaliguide2
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« Reply #1 on: September 09, 2006, 12:45:10 AM »

Ok lets play for real here.  Right now I have an American Portfolio, till I find a Canadian broker that meets my criteria, so I will put that portfolio out here for examples of stop loss.

Sym Name                Current            cost  $Price Obj  Stage  Stop %
HH - Hooper Holmes  $USD 3.83 @ sh 3.00   6.50        1        none
CDE Coeur'd Alene             5.10         4.55  15.00      1      none
LRT La.LX Roy Tr.              3.02          2.88   unk         1      none
WNI Schiff                        6.77         6.58    13.25      1     none
RNG Rio Narcae                 2.25         2.40     4.50       1     none
TMR Meridian Ex                3.32         3.10    6.00       1     none

As you can see I am barely up in 3, up good in 1, and underwater in my two newest stocks.
  Right now, whilst home this weekend I will determine a stop to be set under HH, and I am thinking about 15-20% right now as it is still volatile.
  I will consider HH to be in Stage 2 after it overcomes its next resistance level, so you can see I am watching "Stage Development" more closely than anything else.

Good Luck to all

DG2
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denaliguide2
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« Reply #2 on: September 09, 2006, 10:37:21 AM »

Lets talk about 2 closed trades, using a trailing stop.

The first was earlier this year, when I was trading a NAT-GAS based Royalty Trust out of the States, TRU.  I was spurred to action by a GAP-UP, and watched it go right to Stage 3, Parabolic BlowOff.  Made me feel seasick just watching it, no Gravol for Stocks, LOL.  Soo before I left work that day, I watched it between jobs, and it was ramping, if you remember April and May of this year, so I was concerned. Next day I set a tight 3% trailing stop, and by the time I got back from my first job I had been stopped out, with a 10% profit.  After that debacle of "liquidity drained" from the system by first the Fed and then world CB's, I was glad to have exited with my skin intact.
  Second case was this summer when I was projecting NO RATE RAISE by the FED.  I had taken a postion in NTR [ New York Mortgage] on a Limit Buy order which caught it at a nice low [not all my buys turn out so good/this buy low, saved my skin].  Having successfully guessed that the FED would HOLD STEADY, NTR moved into Stage 2, up from my buy at $4.15 over two weeks to $4.70 where it stalled.  At this point I began to feel insecure in this postion and put in a 7% trailing stop on an intuitive feeling.  It tripped @ 4.40, as NTR dropped precipitously, leaving me out with a small profit, just barely. 
  Since the time either stop was tripped, neither stock has held above the high from whence the stops were tripped, and NTR still hasnt gotten back in positive territory, so I am satisfied those two STOPS as Triggered were good sells.  All my sales previous to that, this year were manual sells.
  Thats the most recent experience I can share concerning TRAILING STOPS.

Good Luck to all

DG2
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