----- Original Message -----
Sent: Friday, June 29, 2001 8:23 PM
Subject: Re: [sharechat] LEARNING TO
INVEST >>>>> SETTING STOP-LOSSES
An EXCELLENT post, thanks
Phaedrus.
And thanks also for (much of the time)
single-handedly promoting the virtues of TA to the uninitiated (such as
myself). I must admit that at first I thought it WAS snake oil, having
been swayed by statements from others on this forum that charts could not
predict the future.
However, after watching my TLS shares go up and down
like a roller-coaster, I realised I had missed several profitable trading
opportunities in the 18 months I have held them. But being new to the
game, I didn't have the confidence to know when to make the
trades.
Don't get me wrong, I have no ambition to be a
day-trader. Some of my shares e.g. CEN and FFS are relatively stable,
with a fairly certain long-term growth path. Buy-and-hold seems to be
the most sensible strategy there, although if someone offers a silly
price...
However, there are others such as TEL/TELCA/TELA
which I have successfully traded a few times now, and come away with 50%
profits each time. All has gone well on shares which have RISEN in
value...
But this aspect of setting a Stop-Loss had me
stumped:
By means of occasionally selling good stocks at a
good profit, and holding on to my mistakes, I gradually
selected a
portfolio of underperforming stocks. My overall performance was, as you may
guess, mediocre - consistently underperforming the Index. I was making good
gains, but my cumulative losses were negating them to a significant
extent.
This is where I'm at right about now. I have
some stars e.g. SOE and AIA, but I also have some dogs like ADV and THL.
A disciplined stop-loss strategy would have saved me a lot of angst in the
case of ADV :(
But lessons don't come cheaply in this game, and I
can see where a good charting program and Stop-Loss strategy would have saved
me from several costly mistakes. Not to mention confirming the right
times to trade cyclical stocks such as TLS or TEL. With TEL, I've mostly
got it right more through good luck than good management. But TLS is
another story...
So, having been enlightened over the past couple of
months by your excellent posts on TA, I searched through the archives for
mention of a good charting program. I'm happy to say I decided to try
Fund Manager Professional Version which is shareware, so you can try before
you buy. I believe it has a 2-month trial period, which should be
plenty.
From what I've seen so far, I'm blown
away!
Fund Manager can do nearly all the clever stuff
you've introduced me to, Phaedrus, but it only costs US$100 when you register
it. From the look of your graphs, you're using Metastock -- is that
right?
(just in case anyone's interested).
It explains all the stuff like MACD, EMAs, Bollinger
Bands, Oscillators, etc, etc...
After having looked at the indicators you've used
Phaedrus in your excellent charts, I set up something similar for TLS.
The MACD Histograms are a very powerful tool for
indicating good buying and selling opportunities, and when MAs or EMAs cross,
it can be a sign that something is about to happen.
Anyway, enough rambling from me.
I just wanted to say thanks for opening my eyes, and
while I've yet to make a trade on the basis of my new-found knowledge, it's
great to have such a powerful analytical tool at my fingertips.
Cheers
Grant Keymer
____________
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