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Strategies & Market Trends : Point and Figure Charting

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To: edward miller who wrote (2850)	5/7/1998 9:16:00 PM
From: Ms. X	of 34810

TRADING IDEAS: SOME RULES -DWA These are general rules for cutting your losses short and switching to trades which might prove more profitable. 1. Do not let your losses go beyond 10%. This was A.W. Cohen's feeling and comes from his book, "The Three Point Reversal Method of Point & Figure Technical Analysis". William O'Neill also feels losses should be contained to 10% and no more. You may adopt this stop loss philosophy or not. We prefer to use stops when the underlying stock actually gives a sell signal on the chart or produces a high pole warning. Our stops can be painful in some cases. If the stop is too far away from the current price, then look for a stock with a better risk reward relationship. Using the option premium as your stop avoids these considerations. 2. Give your trade about 3 months to work in your favor. If it does not work in that time, close the position. It is imperative to keep your capital working for you. If nothing is going on in three months, there is a likelihood nothing will be going on the next three months. The reason we use Point & Figure charts is to attempt to catch the move as it is about to happen. The so called "Value Investor" is perfectly happy to buy stocks perceived as undervalued and sit for years waiting for the market to fairly value them. We prefer to attempt to buy these same stocks when the market is ready to sponsor them. Market Commentary: The Right Stock 5-7-98 Message 4366904 Market Commentary: Stock Band Aid 5-05-97 Message 4339130 Market Commentary: Higher Highes- Higher Lows 5-5-97 Message 4325705 Market Commentary: Black Gold 5-1-98 Message 4296099 Market Commentary: A New Dawn 4-30-98 Message 4275191

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