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Aongus,
The answer on targets is purely technical. For targets I use
either a whole number just under the 52 week high or a whole number
just under the top of an intermediate or long term channel. The
thinking here is the same, that if the thee stock has good
fundamentals and technicals, it should test the old high or the top of
the channel. Since the test fails a lot of the time, I want to get
out just before the test concludes. If the test is successful on old
highs, that is we have a break out, I can always get back in.
On the other hand, if a stock is trading at new 52 week highs and
in a narrow channel, there isn't a logical target to pick and I'll
just let it run with tight stops.
JimG
-----Original Message-----
From: Aongus Flood <aflood@xxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Sunday, November 15, 1998 12:21 AM
Subject: RE: Stock Trading Building Blocks
>Jim,
>
>Please continue. I am particularly interested on how you assess
targets.
>Do you consider fundamental valuations or is it more on technical
>thresholds. I find this area hard to do consistantly and
objectively.
>Interesting, I have found that if about half the target is reached
very
>quickly it is often better to exit earlier than later.
>
>Thanks for your thoughts
>Aongus
>
>-----Original Message-----
>From: owner-metastock@xxxxxxxxxxxxx
>[mailto:owner-metastock@xxxxxxxxxxxxx]On Behalf Of Jim Greening
>Sent: Saturday, November 14, 1998 7:26 PM
>To: Metastock
>Subject: Stock Trading Building Blocks
>
>
>All,
> This may be slightly out of scope in that it is a larger topic
>than just MetaStock charting and testing, although that's definitely
a
>good part of it. I thought it would be interesting to share our
ideas
>on the building blocks or elements of a complete stock trading
>methodology.
>
> I have tried to build my own trading system on what I think is a
>logical set of building blocks. The elements of my trading system
>follow:
>1. A systematic method of narrowing the universe of stocks to a few
>potential trading candidates that have certain characteristics that
>have resulted in successful trades in the past. My searches or
>filters use a combination of fundamental and technical criteria.
>2. A market tracking mechanism that indicates when it is OK to enter
>a position and whether that position should be long or short. I use
>trend channels for this.
>3. Tests and a methodology for making the final stock selection for
>new positions.
>4. A money management system that limits overall portfolio risk on
>each new position and tells how large each position should be. I
>won't risk more than 5% (usually 2 to 3%) of my portfolio on any one
>position.
>5. A method for setting stops and targets although targets are not
>always required. Stops should be based on Technical Analysis rather
>than an arbitrary percentage or point move. Stop placement tied back
>to money management can affect position size. Again, I use trend
>channels for this.
>6. An exit strategy. Mine is simple, exit when a target or stop is
>hit.
>
> Does anyone have any comments on the above building blocks? Any
>to add? Do you disagree with any? Is anyone interested into going
>into details on each of the building blocks?
>
>JimG
>
>
>
>
>
>
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