Stage Analysis Video Training Course

Stop Loss Positioning Guide - Page 7

#49

RE: Stop Loss Positioning Guide

(2013-03-20, 11:15 PM)isatrader Wrote: Here's the first example charts of where to put to put the stop loss. In March 2012 Abbott Laboratories (ABT) was recommended as a continuation buy on a pullback towards the 56-57 zone. The Trader Stop Loss was given as 54.49 and the Investor Stop Loss was given as 52.99.

Trader stop - looking at the daily chart the pivot low was 54.74 and so the 54.49 gives a little bit of room, plus it's below a half number as suggested in the book on page 183. The pivot low used is not visible on the weekly chart, which shows that it probably doesn't have to be the last major pivot, just the last notable pivot low, but this will become clearer as I go through these examples.

Investor stop - 52.99 was the recommended level, which is below the 30 week MA and also just under a round number. On the daily chart it is just under the 200 day MA also, but again it is not clear if this has any relevance yet until I go through more examples.

ATR distance to stops - On each chart I'm looking at the ATR(200) percentage distance from the recommended entry points to see what the average is for trader and investor positions as this could further help when choosing potential stocks with the risk reward calculations. For ABT the ATR(200) was 0.809 at the time of the recommendation and so:
  • 1.87% to 3.10% ATR - Trader stop range
  • 3.72% to 4.96% ATR - Investor stop range

Other observations - Price dips below the 50 day MA on a number of occasions; volume only average; relative performance fairly flat; moving averages all rising.

Hi isatrader, 

just wondering if you can go into how the percentage of the ATR range was calculated, ex. 1.87% to 3.10% ATR - Trader stop range. I can't for the life of me figure out, thanks.

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#50

RE: Stop Loss Positioning Guide

(2019-01-28, 08:07 AM)tomyoung Wrote: just wondering if you can go into how the percentage of the ATR range was calculated, ex. 1.87% to 3.10% ATR - Trader stop range. I can't for the life of me figure out, thanks.

For the examples I was using the 200 day ATR. So % was how I was writing it at the time, but the above would be 1.87 times the 200 day ATR to 3.10 times the 200 day ATR.

isatrader

Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
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#51

RE: Stop Loss Positioning Guide

(2019-01-28, 09:14 AM)isatrader Wrote:
(2019-01-28, 08:07 AM)tomyoung Wrote: just wondering if you can go into how the percentage of the ATR range was calculated, ex. 1.87% to 3.10% ATR - Trader stop range. I can't for the life of me figure out, thanks.

For the examples I was using the 200 day ATR. So % was how I was writing it at the time, but the above would be 1.87 times the 200 day ATR to 3.10 times the 200 day ATR.

Ah I see, I was reading it as 1.87 percent of 200d ATR. it makes more sense now. Thanks for clearing it up  Smile

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#52

RE: Stop Loss Positioning Guide

What do you mean by "swing low"? A line of support connecting 2 or more lows? 

(2013-03-20, 08:27 PM)isatrader Wrote: Trailing Stop Loss Guide for Traders (Average 2 to 4 months)

[Image: attachment.php?aid=521]

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#53

RE: Example #1 - Abbott Laboratories (ABT)

How was 3.72%-4.96% calculated from 0.809 ATR ? 3.72-4.96% of what? And with that 3.72-4.96%, how do you then calculate the price of the stop? #confused

(2013-03-20, 11:15 PM) Wrote: Investor stop - 52.99 was the recommended level, which is below the 30 week MA and also just under a round number. On the daily chart it is just under the 200 day MA also, but again it is not clear if this has any relevance yet until I go through more examples.

ATR distance to stops - On each chart I'm looking at the ATR(200) percentage distance from the recommended entry points to see what the average is for trader and investor positions as this could further help when choosing potential stocks with the risk reward calculations. For ABT the ATR(200) was 0.809 at the time of the recommendation and so:
  • 1.87% to 3.10% ATR - Trader stop range
  • 3.72% to 4.96% ATR - Investor stop range

Other observations - Price dips below the 50 day MA on a number of occasions; volume only average; relative performance fairly flat; moving averages all rising.

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#54

RE: Example #2 - Archer-Daniels-Midland (ADM)

I\'m using Prorealtime and charting these old charts from 2012 and they look completely different from what you posted below using stockcharts. Any explanation for why?

(2013-03-21, 02:04 PM)isatrader Wrote: Archer-Daniels-Midland (ADM) was said to be in a strong Stage 2 uptrend, and additional buying was recommended on pullbacks towards support around the 30-31 zone. The Trader Stop Loss was given as 28.99 and the Investor Stop Loss was given as 27.99

Trader stop - on the daily chart the last pivot low was 28.11 and so the 28.99 suggested stop loss position was decided by other means. The 6% rule is a potential reason, as from the max entry of 31 that would give 29.14, and so as it's close to a round number and so it would be put just below following the rules. The other possible reason could have been the 200 day MA which was at 29.11 at the time.

Investor stop - 27.99 was the recommended level, which is below the swing low of 28.11 and the 30 week MA, and also just under a round number again. On the daily chart it's under all the MAs, but the reason looks to be solely based on the pivot low for this one imo.

ATR distance to stops - For ADM the ATR(200) was 0.731 at the time of the recommendation and so:
  • 1.38% to 2.75% ATR - Trader stop range
  • 2.75% to 4.12% ATR - Investor stop range
Other observations - no notable volume increase on or following the breakout; relative performance versus the S&P 500 was below it's zero line still and divergent from the price action; 30 week MA was flat on the breakout; finally there was near term resistance to around the 32 level. So would only have been considered an average pick per the methods entry requirements, and not the A+ type of stock that the forest to the trees approach was looking for at the time, so am not sure why it was included other than it was in early Stage 2.

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#55

RE: Stop Loss Positioning Guide

(2019-02-04, 02:25 AM)Red Barron Wrote: What do you mean by "swing low"? A line of support connecting 2 or more lows? 

The swing low is just the low reached by stock price on each significant pull back in price as moves. They should stand out on the weekly chart.


(2019-02-04, 02:53 AM)Red Barron Wrote: How was 3.72%-4.96% calculated from 0.809 ATR ? 3.72-4.96% of what? And with that 3.72-4.96%, how do you then calculate the price of the stop? #confused

Sorry, my bad. The % sign should be an x (i.e. multiplied by) really. It was just how I was referencing them at the time when I wrote this. So the range would have been be 3.72x to 4.96x the 200 day ATR.


(2019-02-04, 03:21 AM)Red Barron Wrote: I'm using Prorealtime and charting these old charts from 2012 and they look completely different from what you posted below using stockcharts. Any explanation for why?

Prorealtime doesn't always adjust it data for splits etc, so if you are looking at old charts then there's a good chance that the prices will show differently now, to how they were back then.

isatrader

Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
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#56

RE: Stop Loss Positioning Guide

Using the investor method, the stop is to placed under the line of support is it not, instead of just the last dip/swing low, which is the traders method to my understanding?

I'm still confused where you came up with 3.72 and 4.96 in the above example you used.

I noticed you seem to prefer 200 day MA's instead of 150MA's, like Weinstein used in the book. Is that your personal preference, or has Weinstein adopted the 200 over the 150?

If Weinstein's TA methods described in his book were successful, why hasn't a newer edition of his book been published since 1986 and why haven't there been other books and articles written about his method since then? I just wonder about that. With the advent of fast paced computerized trading and other market changes over the past 33 years, you'd think a new edition is long overdue, or that someone else would publish an updated, modern version of what Weinstein first laid out.

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