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Politics : High Tolerance Plasticity

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To: Peter van Steennis who wrote (18615)	1/19/2003 10:39:06 PM
From: kodiak_bull	Read Replies (3) of 23153

Peter, As you see, there are many ways to set your stops. It's important to keep your goals in mind. You want to 1) hold the stock for the long, big gain, if possible 2) avoid getting whipsawed out by normal daily movements or the machinations of the market maker and 3) lock in your profits. You basically want to set the stop so the only thing that takes you out is a change in the story, evidenced by the depth of the move. You could look at the chart, eyeball the slope (and previous slopes) and set your stop just under that point. You can use moving averages, a fibonacci number, whatever method you think is reasonable to find that point. No system will be perfect, and you may get taken out of a position which then reverses and powers back up--this means you have to be ready to re-enter a stock after you've been stopped out IF the elements in the stock would cause you to buy at the then price. I think the O'Neill IBD approach is to set the stop 8% below the closing price, which would be 4.96. That seems a little high, and a little likely to get whipsawed out. I'd set it for about $4.73 based on Friday's close. TA books often have sections on the proper use of stops. Kb

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