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To: voodooist who wrote (16400)	9/19/1998 10:06:00 AM
From: DanZ	Respond to of 53068

Stops. I just wanted to add a little to the discussion. I can see Ron's, Sue's, and Fred's points of view and I think the approach that one takes depends on a lot of factors. In theory, I set mental stops based on support rather than a fixed percentage below my entry point. In the good ole days when I had more discipline <g>, I only bought stocks that were trading at support to limit my downside risk and I would sell immediately if support was broken. The only caveat is that I would hold if the next support level wasn't much further down and I was willing to accept the risk that the stock might fall there. Examples: 1. XYZ has support at 18 5/8. The stock trades down to 19 and I buy it. The next support level is at 13 1/4. If XYZ breaks 18 3/8, I would immediately sell it, no questions asked. 2. ABC has support at 18 5/8. The stock trades down to 19 and I buy it. The next support level is at 17 1/4. If ABC breaks 18 3/8, I would probably hold it because I'm only risking another point. If ABC breaks 17, then I would sell it. The main problem with the ABC example is that sometimes several support levels are close together and a stock will break them one by one. Before you know it, you are sitting on a 5 point paper loss. The bottom line is you have to decide when enough is enough in a situation like this. It's much easier to decide when to take a loss if the next support level is much further down than the current support level. If you use bollinger bands for support and resistance, the next support level is usually far enough away and it's easy to make a decision. However, if you use other charting methods in conjunction with bollinger bands, then it becomes more difficult to decide when to take the loss because other support levels will show up on the chart. I think it's better to stick with bollinger bands and not cloud the issue with other charting methods. My problem in June through August is that I didn't stick to my discipline. I felt like a football player that knew how to play the game but didn't execute. I have since regained my discipline and have been more successful the past few weeks. With this in mind, some might question why I have been buying VLSI the past week. The stock has developed new support in the low 7 area and I think it's a good buy with a mental stop between 6 1/2 and 6 13/16. I will be the first to admit that I never should have held the Z's position as long I have. I even sold my personal position between 12 1/2 and 13 1/4. I can't take back what happened in the past, but that doesn't make VLSI a bad buy now. If the stock breaks 7, I am planning to unload 1/2 of my position at 6 13/16 and another 1/2 if it trades to 6 1/2. Have a nice weekend everybody. Dan