Stop Loss Settings and Strategy

FOSL Stop Loss Techniques

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Annualized Returns of Trading Strategies for FOSL

	Best Return	at Stop	Episodes	Length	Best +10	at Stop	-5 to -25
Buy and Hold	48.15 %		0.21	1201.00
Buy On Rise Hold	53.00 %		0.23	1106.22
Buy On Dip Hold	75.79 %		0.24	1031.42
Signal and Hold	51.17 %		0.15	1671.60
Stops Only	30.18 %	-0.12	3.00	80.49	30.18 %	-0.12	9.64 %
Sell Signal Trim Stops	32.07 %	-0.14	3.00	76.51	32.07 %	-0.14	13.41 %
Buy Signals	71.21 %	-0.02	25.00	9.87	44.30 %	-0.12	29.71 %
All Methods	73.33 %	-0.02	27.00	9.21	43.16 %	-0.18	35.99 %

This table shows the results some simple trading policies from brute-force calculations on every trading day during the last 10 years. The top lines of the table show results from several variations on the classic Buy and Hold strategy, for which the concept of stops does not apply. This much used strategy yielded 48.00 %.

The most basic flavor of the Buy and Hold strategy is tested by buying on every day of the period, then holding all the way to the present date. A less simplistic version might involve the momentum investor's ploy of buying only on rising prices, or the more contrarian tactic of buying on the dips.

Generally, we have found the Buy-On-Dip policy to offer better returns than the Buy-On-Rise. That is true in this case, indicating some of the benefit of betting against the crowd when investing. Both strategies offer improvement over the unadorned Buy and Hold. Using technical indicators to buy and then hold, improves on the simple Buy and Hold strategy, but is still not the best.

Strategies lacking a stop-loss policy are too dangerous, given that every stock, sooner or later, will become worthless.

From the Report Dated 11/5/2010: -12 % has been the best sliding stop-loss setting for FOSL in the past. This assumes the stops are adjusted on the week-end. This setting has produced a historical yield of 30.00 %. (The yield during the holding period is annualized to provide this figure).

How to set sliding stop limits for Fossil, Inc.:

Stop loss limit orders would appear to be almost always desirable. But where to set the stop limit is controversial. Setting to limit too low may allow for too great a loss. But setting the limit too high may cause the trade to "stop out" prematurely, perhaps missing a rally and also incurring an unwelcome brokerage fee.

Two issues need to be settled in arriving at a stop limit strategy. The first is to determine the price to position the stop loss at a percentage below the buy-in price. The second is to determine a strategy for raising or sliding the stop to lock in gains without undue risk of prematurely "stopping out" on some insignificant dip in price.

Some would advise you to set the stops at what you feel to be an acceptable loss. However, "feeling" is an extremely misleading guide. These charts are the output of a "brute force" calculation giving results for every stop loss setting from one percent to fifty percent on every trading day of the past ten years.

The bars represent the annual percentage appreciation achieved for each stop loss setting. This percentage is numbered on the right (blue) axis. The purple line depicts the number of "stop outs" on average per year at each stop loss setting . Transaction costs directly relate to this number on the left (purple) axis.

These charts represent different strategies for "sliding" the stops to lock in gains. The first simply moves the stop up every day to the pre-determined percentage below the close price. The others move the stops up at the end of every week, and at the end of every month. Generally speaking, it seems better to move the stops less frequently than daily.

More than 70 Hi-Rez charts daily for Fossil, Inc.:

Predictions

Support and Resistance

Frequency Analysis

Japanese CandleSticks

Technical Oscillators

Moving Averages

Stratification Analysis

Politics and Prices

Classical Time Series

Historical Volume

Bernoulli Analysis

Momentum Investing

Seasonal Trends

Back to FOSL Table of Contents

Technical Buy Signals and Trailing Stop-loss

Trailing stops set at -18.00 %

Start	End	Buy In	End Price	Dif	Total	Type	Sessions
5/4/2001	7/6/2001	8.40	8.36	-0.04	-0.04	1	43
5/15/2001	7/6/2001	9.36	8.36	-1.00	-1.04	1	36
5/24/2001	7/6/2001	10.38	8.36	-2.02	-3.06	1	29
6/15/2001	9/17/2001	9.58	7.18	-2.40	-5.46	1	60
7/20/2001	9/17/2001	8.76	7.18	-1.58	-7.04	1	36
9/21/2001	7/15/2002	6.41	12.48	6.07	-0.97	1	202
9/26/2001	7/15/2002	6.71	12.48	5.77	4.80	1	199
10/3/2001	7/15/2002	7.56	12.48	4.92	9.72	1	194
10/29/2001	7/15/2002	7.99	12.48	4.49	14.21	1	176
11/9/2001	7/15/2002	8.12	12.48	4.36	18.57	1	167
12/17/2001	7/15/2002	9.20	12.48	3.28	21.85	1	142
1/10/2002	7/15/2002	9.11	12.48	3.37	25.22	1	126
1/28/2002	7/15/2002	9.78	12.48	2.70	27.92	1	115
3/28/2002	7/15/2002	11.82	12.48	0.66	28.58	1	74
8/13/2002	10/1/2002	12.41	12.81	0.40	28.98	1	34
10/4/2002	1/30/2003	11.77	11.92	0.15	29.13	1	80
10/17/2002	1/30/2003	12.15	11.92	-0.23	28.90	1	71
11/12/2002	1/30/2003	12.80	11.92	-0.88	28.02	1	53
11/15/2002	1/30/2003	12.47	11.92	-0.55	27.47	1	50
1/24/2003	8/6/2004	12.22	22.01	9.79	37.26	1	386
2/10/2003	8/6/2004	11.49	22.01	10.52	47.78	1	375
4/21/2003	8/6/2004	12.33	22.01	9.68	57.46	1	327
5/13/2003	8/6/2004	13.84	22.01	8.17	65.63	1	311
7/7/2003	8/6/2004	17.14	22.01	4.87	70.50	1	274
10/9/2003	8/6/2004	18.03	22.01	3.98	74.48	1	207
11/11/2003	8/6/2004	18.65	22.01	3.36	77.84	1	184
1/5/2004	8/6/2004	18.23	22.01	3.78	81.62	1	148
5/10/2004	8/6/2004	22.65	22.01	-0.64	80.98	1	61
5/26/2004	8/6/2004	23.75	22.01	-1.74	79.24	1	49
8/10/2004	12/6/2004	25.77	25.16	-0.61	78.63	1	82
9/24/2004	12/6/2004	30.30	25.16	-5.14	73.49	1	50
11/9/2004	4/28/2005	27.76	23.37	-4.39	69.10	1	117
12/21/2004	4/28/2005	24.28	23.37	-0.91	68.19	1	88
2/22/2005	5/10/2005	25.61	19.05	-6.56	61.63	1	54
3/10/2005	5/10/2005	26.07	19.05	-7.02	54.61	1	42
5/10/2005	9/21/2005	19.05	18.89	-0.16	54.45	1	93
6/24/2005	9/21/2005	21.19	18.89	-2.30	52.15	1	61
8/9/2005	10/3/2005	21.53	17.97	-3.56	48.59	1	38
8/18/2005	10/3/2005	20.90	17.97	-2.93	45.66	1	31
8/23/2005	10/3/2005	20.25	17.97	-2.28	43.38	1	28
11/8/2005	2/3/2006	18.78	17.38	-1.40	41.98	1	59
11/16/2005	2/3/2006	19.23	17.38	-1.85	40.13	1	53
2/3/2006	7/31/2007	17.38	25.55	8.17	48.30	1	373
2/16/2006	7/31/2007	18.29	25.55	7.26	55.56	1	364
2/22/2006	7/31/2007	17.70	25.55	7.85	63.41	1	361
6/28/2006	7/31/2007	17.12	25.55	8.43	71.84	1	273
8/8/2006	7/31/2007	18.98	25.55	6.57	78.41	1	245
8/2/2007	1/4/2008	25.69	35.97	10.28	88.69	1	107
11/26/2007	1/4/2008	43.85	35.97	-7.88	80.81	1	27
1/31/2008	6/3/2008	33.98	29.88	-4.10	76.71	1	85
6/29/2009	5/7/2010	23.92	33.95	10.03	86.74	1	216
6/25/2010	11/5/2010	36.56	62.22	25.66	112.40	0	93

Total Session Units Invested 7149
Sessions In Time Span 2398 Avg. Units Invested 2.98

Unit Shares	Market Order Commissions	Stop Order Commissions	Profit
100	52 at $5.00	17 at $15.00	$10,725.00
100	52 at $30.00	17 at $30.00	$9,170.00
1000	52 at $5.00	17 at $15.00	$111,884.99
1000	52 at $30.00	17 at $30.00	$110,329.99

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