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Bill,
In general, I don't like stops based on an arbitrary percentage
loss or protecting a percentage of profits. The reason is that I
think the stops should be based on some technical condition related to
the stocks price and/or volume. The stock is not going to react based
on how much you have gained or lost, but may well react to a technical
condition. I personally prefer to place stops just under (or over for
short positions) trend channels with the thought that the channel
should hold more often then not. There are certainly other valid
technical methods of placing stops, but trend channels work well for
me.
That doesn't mean you shouldn't consider portfolio money
management or reward/risk ratios. You can do that by considering how
close you need to be to a technical stop and target before entering a
position.
Jim
-----Original Message-----
From: Bill Saxon <bsaxon@xxxxxxxxxxxxxxx>
To: EMail FastTrack <fasttrack@xxxxxxxxxxxxxx>; EMail Metastock
<metastock@xxxxxxxxxxxxx>
Date: Saturday, June 13, 1998 8:48 AM
Subject: Market timing and stops?
>I get so involved in trying to assess the general Market that I
>sometimes neglect the choice of individual equities or flee from all
>of them in a panic. What is the groups opinion of using a stop on
>each security of perhaps "Protect 90% of Capital and 90% of the Gain
>over 5%", or some variation thereof, and rely it to get out of the
>Market to the extent warranted? I just get tired of fretting about
>it.
>
>It is difficult enough to just pick the stocks without second
guessing
>oneself on the Market. In an up or down Market one needs to cut
>losses and protect gains regardless.
>
>In addition, in back testing, this approach seems to work very well
>for exits as opposed to certain conditions being met in price and/or
>volume indicators.
>
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