Stage Analysis Beginners Questions

RE: Beginners Questions

Yes, I agree StageAnalysis - I'm moving towards going long only when there's a clear market or sector uptrend (preferably both).

Alex

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(This post was last modified: 11-23-2018, 09:57 PM by Red Barron.)

RE: Beginners Questions

Weinstein emphasizes the necessity of placing protective stops. How effective are these at taking you out of a stock at or near the stop, especially when it comes to volatile small caps and micro caps that are priced in the single digits and, therefore, not very liquid? An example is AVXL's chart back in early November of 2015 when it tanked hard and fast from $15 down to below $3. Could a sell stop have gotten you out of that crash at, or near, the level of the stop? AVXL had 40 million outstanding shares and a market cap of $600 million at $15

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RE: Beginners Questions

(11-23-2018, 09:54 PM)Red Barron Wrote: Weinstein emphasizes the necessity of placing protective stops. How effective are these at taking you out of a stock at or near the stop, especially when it comes to volatile small caps and micro caps that are priced in the single digits and, therefore, not very liquid? An example is AVXL's chart back in early November of 2015 when it tanked hard and fast from $15 down to below $3. Could a sell stop have gotten you out of that crash at, or near, the level of the stop? AVXL had 40 million outstanding shares and a market cap of $600 million at $15

I've come across some slippage many times in the past when dealing with illiquid stocks. So I do think it's important to only trade stocks with good liquidity, to help lower that risk, and it also lowers your cost, as the spread is smaller in stocks with good liquidity. So if a stock is fairly illiquid then it may gap past your stop loss a bit and get you out at a lower price than you'd like.

But I think in the example that you've used there was a period of days to get out before the major collapse without needed to wait for the stop loss, as there was a very heavy volume down day on the 5 Nov 2015 that pulled the stock back from the parabolic new highs to around $11. Which is a major warning sign in Stage Analysis, as a pullback should be on contracting volume, not expanding. And after a parabolic 1000%+ move in only half a year you need to get more aggressive with your exit strategy and look at taking profits into the strength, and be looking for signs that it's not behaving as it should, as anytime a stock falls 18% in a day like this did on that day you'd want to be exiting, and moving on.

Stop losses are needed, but there is normally other signs in the stock well before you get anywhere near them when it's in a Stage 2 advance. So you need to learn to spot the signs of bad behaviour in a stock that you hold, so that you can take appropriate action. Always remember about the "Opportunity Cost", and don't be afraid to take a good profit when it presents itself if you've gotten very extended above your stop loss, or a stock is trading well out of it's normal range.

   

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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RE: Beginners Questions

Just a quick question, im just wondering if anyone on here day trades and what are other peoples opinions on it ?

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RE: Beginners Questions

(01-06-2019, 03:03 PM)Reece Webb Wrote: Just a quick question, im just wondering if anyone on here day trades and what are other peoples opinions on it ?

It's not part of Weinstein's method, and his preferred method was the longer term investor method.

From my personal perspective, you shouldn't do it unless you have proven system that has a statistical edge. As without that, it's basically gambling. So, I'd suggest not, unless you have such a system. But is obviously irrelevant for Stage Analysis, so not something to be discussed on here, as will take people off topic.

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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RE: Beginners Questions

Of course i will always and only use weinsteins method, i was just wondering if anyone did it on here and what their views were, thanks for the input and your view Smile

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RE: Beginners Questions

Hello, I recently read Stan Weinstein’s Secrets For Profiting in Bull and Bear Markets a few months ago and have been hooked to the stock market since. I was wondering if there’s any other books or videos that would be helpful to read that use the same/similar method? I’m new to the stock market and would like as much advice as possible, thanks!

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RE: Beginners Questions

(02-26-2019, 02:07 AM)James Wrote: Hello, I recently read Stan Weinstein’s Secrets For Profiting in Bull and Bear Markets a few months ago and have been hooked to the stock market since. I was wondering if there’s any other books or videos that would be helpful to read that use the same/similar method? I’m new to the stock market and would like as much advice as possible, thanks!

Hi James, if you visit the main Stan Weinstein thread, there's a bunch of links in the first post that will help you. With regards to books that compliment the method. Mark Minervini's two books are really good if you are interested in the trader method, as they go into great detail and introduce some new concepts, like the Volatility Contraction Pattern, which is really good for minimising risk on entries. Another book that is good and compliments the trader method is How to Make Money in Stocks by William O'Neil. To learn more about relative strength, which is a key component of the method, then Point and Figure Charting by Thomas J. Dorsey is really helpful. For learning about money mananagement, I'd recommend Come into my Trading Room by Alexander Elder and other books he's written, as they also cover some of the key market breadth indicators that we use in the method.

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