A bit more on the CANSLIM method for those of you who are not familiar..
No. 1 rule - Always cut your losses short... 7-8% max... Y? cos' if you take profit consistently at 20% and losses at 7%...you can be wrong 3X and right once and still come out OK. For stocks that cheong up more than 20% in 3 weeks.. hold longer... that might be your BIG WINNER.. or what John Boik likes to call MONSTER STOCKS..after the book of the same name.
Most investors don't cut their losses.. it is because of the human need to be right. It is impossible to be right all the time in the mkt. We can be wrong about the stock, wrong about our analysis, wrong about our mkt trends and wrong about our analytical ability or too trusting on the brokers' comments.
Cutting losses is the only way we can protect us from the market and our basic human flaws. The No. 1 reason y most traders fail is because they don't cut their losses short and let their winners ride...
When your stock starts showing a loss.. be VERY FEARFUL that it will snowball enough to damage your portfolio...
If you buy a stock with the proper research and at the start of an uptrend, it is VERY DIFFICULT to hit the 7% loss for Singapore stocks. One can verify that with the data from March 24 onwards...
If when the mkt trends up and your stocks is tanking, the mkt is telling you that YOU ARE WRONG..
Best is to cut and move on.
As for US stocks, start buying when the top rated stocks with superior earnings as they break out of bases in a mkt uptrend. I have covered a couple of examples earlier in the thread on US stock MA and POT.
Hope this helps.
Cheers,
mm