I originally got a position on this stock on July 10 at $15.10 based on your original analysis and my own research. I realize after you further analyzed it that the entry was incorrect but the cash left on the table was a forgone conclusion so I remained in the position.

Since then, the most the stock dropped was 12% which should have kicked me out. Although, I decided to stay in due to the lack of volume on the decrease in price.

I can say that you have another winner on your hands. In the last two days, the stock has risen 15% on heavy buying (a great sign as you know). I see your initial targets as easily reachable and maybe some more.

Let me know what your re-evaluation of this stock is if you choose to do one.

I also wanted to ask you regarding a stock you originally looked at that went past your ideal buy position, GTLS. It looks like it is currently taking a breather and forming a handle. What are your thoughts? Do you see establishing a position here if you did not catch it at original target price of $28?

Thanks again for your thorough research and the valuable info you provide. Keep up the great work!

The 200-d m.a. has been a bread and butter buying technique this year for CANSLIM type stocks (on pullbacks).

In your example, I would use the moving average over the profit retracement. Institutions and market makers use these levels to flush out retail sellers with stop losses.

As far as time frames: I only place a time frame on a stock based on a lack of a profit. For example: I place a position in XYZ and expect a move based on a catalyst within 4 weeks but it goes no where after 6; I will sell it and place my money elsewhere if there is a better opportunity (risk/reward).

When trend trading, there is no hope for a gain in a specific period of time. You just play defense against a stock that doesn’t move within a specific period of time (for me, 3 months or so –discretionary analysis is involved as long as stops are not triggered).

Take MR for example. I loved the stock and bought it but it did nothing for three months. I did sell and then it doubled. Had I waited for one more month, I would have caught the gain. It didn’t matter (in this case) because that money went into MA and BIDU.

So to answer your question, yes I do bail if it stays flat. I don’t day trade and I don’t consider myself a swing trade exclusively. I look for longer trends. I do swing trade when certain opportunities arrive.

You must set time parameters and adjust your stops (if they are profit retracements or std deviations, moving averages, crossovers, oscillators, etc…) based on your objective.

Hope this helps. Read around the blog, some of your questions are answered in other posts. I can’t cover everything in one post, no one would ever read the whole thing.

#1 Does this method only calculate profit based on closing price?

In the BIDU example, the original 4/25 position would be up 28% at the 4/27 high A 25% profit retracement stop based on the high would be 125.47 and you’d be out of the position with a 21% profit.

Not bad for 2 days – but would you rather be in for the subsequent run?

Many would prefer to have this question answered when the position is established – what are you in it for, what’s the goal?

This leads to #2: The method above appears to ignore the timeframe involved.

If your hoping for 20% gains over say 3 months, what do you do if they happen in 2 days? Do you change your plan? What if the position is flat for 3 months – do you bail?

The timeframe involved determines the type of investor / trader you are – a plan that doesn’t include it is not much of a plan.

Keep up the good work!