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The Burns Investment Group

Mar 16 2010 12:06:31

Backtest

Stock Symbol
Shares (100)
Buy Date (mm/dd/yyyy)
Bid Price (12.34)
Risk %
(.05) = 5%
Stop Date
Stop Loss 8.97
Last Price 9.73
Sale Value 973.00
Cost 853.00
Net Profit 120.00
Gain 14.07%

Bid = Buy Price
Initial/Current (SL) Stop Loss = Bid - (Bid * Risk)
(CSL) Calc Stop Loss = Last Price - (Last Price * Risk)

At the end of each day
if CSL is greater than SL or current stop
and CSL is greater than the Buy Price (or breakeven price)
then reset current stop loss to CSL.

Stop loss orders to sell can limit your risk, reduce losses, and preserve capital.  When the stock price falls below a specific price a market sell order is automatically executed.  If you are not an option trader using puts and calls to protect your equity positions, you should consider using stop loss orders to protect your assets.

When a stock price rises, profits can be locked in by adjusting your stop loss upward.

When the gain is greater than the initial risk factor, it is suggested that you set your stop loss to the buy or breakeven price.

Ratchet your stop loss upward at the end of each day rather than using a trailing stop. Trailing stops tend to stop out more quickly with volatility. Adjusting a fixed stop at the end of each day will keep you in the trade longer.

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