Mowerman is the cause of this subject when he asked me ever so politely “have i got my stop / losses in place ?” the short answer was no.
I have been a conventional investor/ trader in aussie stocks (long) for many years now . i have become very good stock picker based on financial fundamentals and using my market analyst charting program and trend bands of both the stock i am concerned with, and the wider economies in general.
But i have not made any huge amounts of money considering my excellent stock picking. Why?
One reason is that my thinking had been frozen when holding some extremely large and very profitable positions to see them slide away to very little. I think i am not a dill but my inaction in those situations was certainly dumb.
Stop / losses - i have to address this.
And now i have a theory on how to arrive at a reasoned figure and start to take advantage of my good picks. Bet you are all hanging off the edge of your seats now ?
No hard and fast rules here just working on an a typical chart which has a long term uptrend of say five months or a shorter term upward trend of two months. With in that major trend there will me ossilating mini trends. And even within those mini trends there will be further variations in price ie - a breather (call it what you will) before the SP continues either its upward or downward movement
So now applying the theory to my stocks
DJS – within the current five month uptrend there are 3 mini trends, the first over 3 mnths, @ 30 degrees slope, the 2nd at near vertical, and the current at 60 degrees slope. Applying my MA linear retracement band to the first mini trend the o/a band width is approx . 25 cents So i apply a trading band of the same 25c. Width to the current mini trend to get a high and low point for the band at Friday’s close. I get $3.18 high and $2.93 low (its not a 25c. Band width centred on the current price but centred on the mean average of the trading band)
(I currently have a bid on this stock at 2.98 on DJS - building my position)
JBH – only one mini trend for four mnths @ 30 degrees slope which has a 180c. Ossilation. So again, applying the trading band with a 180c. Ossilation at friday’s close i get a high of $22.80 and a low of $21.00. - would have been close to stopping out on Friday .
(i currently have a further bid on this stock @ $20.93 ? - building up my position ?)
hope that's not too confusing, and obviously it will not be applicable to all stocks indices etc. - too many variations.
please be free all to comment, i am sure there are a lot of personal views out there - tried and tested, unlike mine.
