Since we are generally longer-term investors, we use 1 or 2, or a combination of both such as 1 for initial stop, and then 2 for trailing stop once position has moved significantly into profit. Just use what you feel most comfortable with.

According to William O'Neill of CANSLIM and Investor's Business Daily fame, a stop of 8% is more than adequate. However, be aware of different volatility of particular stocks and use your judgement. Also make sure at least that your initial stop is further away from price. Experiment, and discover your own tolerance for risk.

An unusual system for placing stops I had some success with was to use long-term average S&P annual gain of 11% and multiply it by stock's beta, if beta is greater than 1. Round this number up or down. Simplistic but effective. If a stock has a beta less than 1, just use 11%. CRDN has, as of 07/07, a beta of 1.307. The stop, if we were buying today would be 11*1.307 or 14%.

14% my seem like a lot to lose, if stock falls after you buy it and hits stop; in a diverse portfolio, this will not happen too often and you will be protected from having to make a 100% gain to break even. Most discount brokerages allow percentage trailing stops nowadays, and may not even charge for them, giving you peace of mind for free.

(c) 2005 The Graham Investor - Value Investing You may use this article, as-is, provided this copyright notice is kept intact.

"Major Time of Day"- Around 2:20pm to 2:40pm time frame, we'll often see moves reverse or gather steam in that timeframe. People that have been holding positions all day long become a bit "antsy" - they have to do something with them before Market closes for day. When people holding losing positions into late into day see time until close is near, that can cause market to make some sharp turns in last 90 minutes. The program gang also likes to get active that time of day.

4. How Can Anyone Trade a Choppy Market?

I take a number of scalps in choppy markets. I time entries with Tick extremes, especially when price pops into previous high areas of congestion, or other intraday support and resistance. Moving averages are not good during choppy days.(Scalps : small profit, "hit and run" type of trades)

5. How Do You Measure Pullbacks?

In a trend move, I like to see shallow pullbacks to a steeply sloped moving average on one of 3 time frames I follow. (more time frames, better) Pullbacks to symmetry in a persistent trend are useful when present.

Example: Rally, dip 2.00 points – Another run up, then a dip of 2.25 points – A another push higher, then a dip 1.75 points. Note continued dips of 1.75-2.25 points repeatedly hold. A pattern has developed, and you want to be buying those shallow pullbacks. This works great used in conjunction with a steep slope of 20 ema on 5 minutes charts, or slightly bigger picture, 60 ema on 5 minute chart.