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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: Tigress who wrote (10641)12/2/1998 12:54:00 PM
From: Ms. X  Read Replies (1) | Respond to of 34818
 
SDTI, right!

Thanks for reminding me. Good timing since I just got my computer back
on line. Now then....

We were talking about when to enter a stock that has run up and is on
a high pole or close to and the stop point is far to low to be
considered a good risk reward.

Here is how the chart of SDTI looks as of yesterday.

20 ---- X <-Stock was up 19 boxes and on a high pole.
19.5 X O
19.0 -------- X O
18.5 X O <--Three box from a high pole is a trade stop
18.0 --------- X O (by the way)
17.5 X O
17.0 ----------X O
16.5 X O
16.0 --------- X O
15.5 X O
15.0 ----------X O
14.5 X O
14.0 ------X --X C <-Stock has moved down to 14 as of yesterday which
13.5 X O X is at a previous level of resistance however...
13.0 ------X O X
12.5 X X O X
12.0 O X O X O X
11.5 O X O X O X
11.0 A X O B O X
10.5 O X O X O
10.0 O X O X <--The stop point is still 8 boxes away. This is
9.5 O X O not a good risk reward.
9.0 O X

The point here is you don't know how far down the stock will run. If
you tried to guess and it fell another 6 boxes, you haven't positioned
yourself very well.

Here is an example of how to manage this trade.

20 ---- X
19.5 X O
19.0 -------- X O
18.5 X O
18.0 --------- X O
17.5 X O
17.0 ----------X O
16.5 X O
16.0 --------- X O
15.5 X O X <-Let's say it reverses up tomorrow or today
15.0 ----------X O X This gives you an entry off the decline with
14.5 X O X a good risk reward stop point.
14.0 ------X --X C
13.5 X O X <--This is now your stop point instead of way
13.0 ------X O X down at 10. Saves you 4 points.
12.5 X X O X
12.0 O X O X O X
11.5 O X O X O X
11.0 A X O B O X
10.5 O X O X O
10.0 O X O X
9.5 O X O
9.0 O X

You haven't gotten in at the bottom of the decline but you have
positioned yourself with an exit that is far better than a guess.
4pt decline is better than a possible 8pt decline.

This works really well with stocks that have run up like this. The
internuts come to mind here too.

Hope that helps.

Jan I am


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