Cutting Losses ... Howard

You still haven't said what to do when the stock proceeds to fall after I buy it. Nor have you listed what your average loss

was per trade loss. If the stock fall 10 points after I buy it, then rallys a point or two driving the rsi(2) above 80 for

2 consecutive days, I have stll lost 8 points. My stop loss has noting to do with interfering with the rsi(2) above 80

rule when the stock rallies, only when it falls. The problem with conners data is that he never shows what happens

when the market and the stocks i buy fall right away. I do not intend to hold onto such stocks indefinitely hoping

they rally.

I would appreciate your thoughts on the the above.

Thank you,

Howard

.....................

If you want to set a stop loss at a fixed percentage or a violation of technical support, do that. My job is to identify
quality stocks with value left in their price that are pulling back. I use the RSI(2) exit because it tests well in good and
bad markets. Having said that, there will be times when a stock continues to fall, gets bad news and drops over night or
is down graded simply because it meets an analyst's price target. MELI is a good example as it's being impacted by the
unsettling financial markets in Latin and South America.

I handle these large losses by position sizing. I devote 25 percent of my portfolio to buying 10 TSM stocks (30 percent
to selling 15 naked puts, 30% to buying 10 high volume ETFs and 15 % to a variety of other strategies). One stock position
ties up 2.5% of my portfolio so even a 50% loss in that position only causes a 1.25% loss to the portfolio. In my situation, I would
rather have hard/fast rules and eliminate the subjective decisions.

Ric Miller, Ph.D.
6-Sigma, Master Black Belt