IBD - Canslim Performance

I used to be a true believer of CANSLIM until reality hit me.

This is the basic idea, assume XYZ is $25 and it start to pull back to $20 and heading up to $25 again. You place a buy stop at $25.10, because it's the pivot point ($0.10 above all time high). You also need to put a protective stop at around $23.10 for 8% stop.

This method sound great, except most CANSLIM stocks are not liquid enough to execute the order as planned.

So the price hit $25.10 and your stop order become a market order, and order filled at $26. Then stock start to pull back again hit your stop at $23.10, which ordered filled at $21.50.

Now, instead of a 8% lost, you get a 18% lost. So I don't know about you, for me, I cannot take too many 18% lost before I give up.
 
Quote from thecalip:

I used to be a true believer of CANSLIM until reality hit me.

This is the basic idea, assume XYZ is $25 and it start to pull back to $20 and heading up to $25 again. You place a buy stop at $25.10, because it's the pivot point ($0.10 above all time high). You also need to put a protective stop at around $23.10 for 8% stop.

This method sound great, except most CANSLIM stocks are not liquid enough to execute the order as planned.

So the price hit $25.10 and your stop order become a market order, and order filled at $26. Then stock start to pull back again hit your stop at $23.10, which ordered filled at $21.50.

Now, instead of a 8% lost, you get a 18% lost. So I don't know about you, for me, I cannot take too many 18% lost before I give up.
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I think its important to take the idea's and philosophy of any method and read into them everything you can. If it makes sense to you, then take that and turn it into something that works for you. I would agree with you that trading it exactly as O'neil advocates is difficult to impossible, especially in thinnly traded (usually the best) issues. This means you have to make adaptations, but it does not negate the fact that these are often the best stocks in the market.
 
Quote from Brandonf:

I would agree with that, its also an excellent place to find short candidates when things turn ugly, that does not make the method's overall long term performance any less impressive though.

Brandon

PS. I'm defending them even though the bastards sued me for simply saying O'Neil influenced the development of my trading. You can probably find the judgement for $1000 or $10,000 they have against me (I cant remember which it is because on principle I would cut my balls off before I pay them for having given them free promotion and tens of thousands of dollars in clients) I HATE IBD the company, CANSLIM the method though is valid.
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I am happy to second your remarks with respect to IBD, and i am not so sure of CANSLIM, i think it's rather gimmicky. I suppose they will try to sue me now.
 
I respectfully disagree. This is a great system to find short term breakout candidates. We use it all the time for our trading systems. They are all momentum/bubble stocks with huge volatility swings.

Happy Trading.
 
Quote from TSotritino:

I respectfully disagree. This is a great system to find short term breakout candidates. We use it all the time for our trading systems. They are all momentum/bubble stocks with huge volatility swings.

Happy Trading.
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You obviously understand what it is all about, and you will be able to profit, and be out at the right time. I wonder about neophytes putting way to much trust in CANSLIM and getting trapped by not recognizing that the "method" only works really well in certain market conditions.
 
quote from TSotritino
This is a great system to find short term breakout candidates.
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The system (CANSLIM) is used for exactly that to find stocks that are going to break out of trading ranges. But like any system one needs to:

1. Watch it for awhile to understand how its functions

2. Apply your own rules to it to make it work best for you.

Similar to say Basic Blackjack strategy if you practice at it you can get a better feel of what works for you.Where it works better and other places where it does not work at all.
 
Quote from piezoe:

You obviously understand what it is all about, and you will be able to profit, and be out at the right time. I wonder about neophytes putting way to much trust in CANSLIM and getting trapped by not recognizing that the "method" only works really well in certain market conditions.
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Those "neophytes" are the reason I make money trading with this system. :)
 
I've tried IBD, and it doesn't work.

Now, I won't waste any time on it.

I've paper traded many of their top picks in their top 100 list a while back, and the results were horrendous.

This was all before I even knew about the brutal CANSLIM funds. The performance of these funds is all you need to know about its efficacy.
 
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