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Guy,
I did look back over the last year and found that I would have done
significantly better switching to a three day low trailing stop when targets
were hit instead of exiting at the target price. It's true I would have
gotten a stop price that was lower than the target on most of the positions,
but a few real rockets like AMZN, AOL, and SCH really tipped the scales.
The look back was enough to convince me to switch. Thanks for suggesting
that I go and look back, should have thought of that my self <G>.
I remember our discussions on the Raff channels about a year ago. As
you know, I used to use them before I switched to the standard deviation
channels. I just couldn't find a good start and end criteria that worked
for me. Glad to hear that they are still working for you. I've always
believed that many systems work, the important thing is to get one that you
understand and trust that works for you.
JimG
-----Original Message-----
From: Guy Gordon <gordon@xxxxxxxxxxx>
To: Jim Greening <JimGinVA@xxxxxxxxxxxxx>; metastock@xxxxxxxxxxxxx
<metastock@xxxxxxxxxxxxx>
Date: Sunday, April 11, 1999 6:15 PM
Subject: Re: Weekly Pick
>On Sun, 11 Apr 1999 16:52:54 -0700, Jim Greening wrote:
>
>> Speaking of targets, I'm thinking about changing my system slightly.
>>The last several stocks that I've closed when they hit their targets have
>>gone on to much higher levels. They have either gone on up by paralleling
>>the top of their channel or have broken out of their channel to set new
>>steeper channels. I want to take a profit near the target if the stock
does
>>turn down, but still allow it to run if it continues higher. What I'm
>>thinking about is instead of closing the position, I'll just tightening my
>>stop to a trailing three day low and stay in the position until the stop
is
>>hit. If the stock does go on to set a new steeper up trend channel, I'll
>>eventually revert to a target and stop based on the new channel. Any
>>comments?
>
>Well, you could look at this statistically. You are accepting a lower
>price for your stock when it turns around and goes down, in return for
>staying in those stocks that stay up. This will only pay off if
>enough of them go up after your target to make up for the lower price
>on the rest of them.
>
>One thing you could do is go back and look at all your trades for the
>last 12 months, and figure out the loss resulting from your new rule,
>verses the gain. I'd suggest doing this "blind", where you only show
>yourself the data up to the point you hit your target and sold. At
>that point, set your stop and look at the next day's data. Step
>through each day until you "sell" or hit the stop.
>
>My gut feel is that you're better off selling at your target.
>
>Note that the above also ignores the time value of money. Holding a
>stock that is creeping along the top of a channel is not as productive
>as buying one that is at the bottom and could take off.
>
>Keep up the good work, Jim. I enjoy reading your thoughts, even when
>I disagree. I'm also in HD (actually, I have it in my mother-in-law's
>account), but I draw my channels differently. I have HD in a Raff
>Regression channel from 2/19/99 to the 4/7/99. As you may recall, I
>like to start and stop my Raff channels on days that the stock is in
>the middle of the channel, to avoid bias. Also, I like them to be
>parallel to the 50-day MA. This channel does that. HD is currently
>at the top of that channel at ~68, and could well come down to the
>bottom at 61. I haven't drawn a long-term channel, but simply use the
>200-day MA.
>
>
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