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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: LastShadow who wrote (2523)9/6/1997 10:31:00 AM
From: LastShadow   of 120523
 
A note on protective stops:

Walter High set up a test portfolio (assumed $60 grand - $10k on each of 6 stocks) based on some of my picks before leaving for three weeks. Letting the account run, only one was profitable for that period, and the account lost about $2500. I looked at the daily charts and the stocks and saw that if protective stop limit had been set for each one at +5%, and -5% the account would have been positive by $2000. Setting a +10% limit would have generated the same amount since some stocks retreated before that upper limit. Setting trailing stops would have made about $4000.

The point is this - if you are unable to watch your stocks (this thread is not an investment recommendation - its a trader's/speculator's watch list) be sure to set limits to protect your initial capital. On lower priced stocks this can be tricky if not downright pointless as the MM's will lower the ask just to grab shares - this has happened to me more than once. I have thought about stating my lower limit and strike price for my posts, but that is a heck of a lot of work and would have to be updated daily as the price moves as I reset both the upper and lower limits as the stock improves. I don't reset the lower if it goes down though. Besides, everyone has their own risk tolerance.

Manage your risk. Set stops if you can't watch the ticker or have some method of getting out when the market maxes out, corrects or a ticker tanks.

Come to think of it, maybe my watch lists make a good short list if you are going to be gone for a month...

lastshadow
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