This week with StockPunk 5-5-2008
The screens didn't change much this week. Zacks and Zweig still has no candidates. The Zweig screen picked only nine stocks this week and they are mostly the same from last week.
I continue to work on my Master's Comprehensive Exams. I don't like them.
Have a good week. I'll chime in when I can.
Posts
8 comments:
Ok, GHM kicked my butt these past two days. I know Scott talked about risk based on 1% of portfolio loss. Does anybody do a Percentage stop loss? Due to yesterday's sell-off and a continuation of that this morning I sold it at a 12% loss. It then turned around and roared back. I sold at 51.50, presently it is at 55.58. So you can see my frustration over $5.00 per share. So it begs the question. Should I have an 8 or 10% stop on my stocks? I wouldn't have lost that extra $5.00 per share if I sold yesterday instead of this morning. Or would you ride the mechanical system and hold GHM all week because it is part of the RS top 5 which I'm using?
Or is the 1% the better way? Had I been following that I still would be holding as it had not reached that (although it was REALLY close. lol)
I guess I'm just looking for what you guys are doing and what you think works best. When to sell still causes me the most grief in trading.
Thanks for the input guys!
I too was stopped on GHM only to see it rocket higher. Since then, I've gone to volatility based stops and my little system says that based on its daily volatility proxied by 2*Average True Range is an initial stop 11% below the purchase price. When the stock is up 2x11% from the purchase price, I will put a trailing stop on, and am figuring it could be at 2.5*ATR (this last part I'm still developing). If you don't want to do trailing stops, just figure on moving your stop up x% for every X% the stock moves up... and never take off your stops!
Currently across the AAII Zweig picks the Stops range from 5% below purchase price for ESL, WW, ARG to 10-11% for GHM, AEHR, ARO. The stop on GHM based on my 7-Apr entry at 52.03 is 46.17, which is 2*ATR below the Cost. (I am not in all the Zweig right now as I am still learning, but hold a couple to put my feet to the fire, so to speak.)
I am learning more on position sizing too and that is part of setting stops. Scott is doing the right stuff on this and the Van Tharpe DVDs are helpful.
I will be backtesting Zweig with different stop techniques and will post my results when done in a couple weeks.
If the above is too complicated, set a 15% stop and trust that long term the system's performance will make up for the few losers that fall that much before being kicked out by the screen.
GHM came back very strong today. Suggestions on where to go to research why a stock has sold off suddenly like it did yesterday? Perhaps if I knew why it had and felt it was a blip on the radar I would not have been so quick to sell it. Instead of losing 12% I would have been back to even today. I'd rather not have that happen again.
Hi sc,
Which tool do you use to backtest a screening method with stop lossess included?
Regards ;)
Albert
Albert,
I have begun using portfolio123.com. It is much more cost effective than clarifi.com's ModelStation (for now) and has the ability to add sell rules such as stops and trailing stops. There is a learning curve but it is useful tool for testing ideas. I've only been using it a couple of weeks. They have a good user group too.
Matt,
I've been working on stops for the last 4 years. I still haven't found the holy grail. I've recently moved from placing percentage stops to using multiples of Average True Range. It may not make any difference but it seems less arbitrary to me than percentage stops.
When a stock like GHM breaks out the way it did, I expect a 40% return. I'll put a 4% trailing stop on it once it hits 40%. That way I keep most of the gains, I avoid a big hit, and my stop takes me out unemotionally.
The 1% of portfolio value only applies to the initial trade. It's insurance against a trade that goes bad from the start.
I wouldn't have any problem with someone holding the stock mechanically, because most times you'll hate yourself for getting out too soon.
Got stopped on ANDE. Of course if came back. Just paid $650 in tuition to the market. :-( Still a lot to learn...
Hey,
Did anybody catch which day this week ARG was upgraded by ZACKS to a #1? It wasn't a 1 on Monday, we know that, and it gapped up on Wednesday. I'm just curious if it was upgraded to 1 before or after that gap. I missed the day it was upgraded.
Thanks,
Matt
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