AT&T had a very nice run for the next two months hitting a high of $31.97 on March 21 (point 4), so the stop was raised to $29.53, which was under the February low. The correction from the highs lasted longer and was deeper than I expected as it reached a low of $30.55 on April 10. This was a test of the 38.2% support from the November low.
Early the next month AT&T had made another new high and on May 7 the stop was raised to $31.18 (point 5), which was below the March high. The stock kept moving higher and on June 1 I recommended selling 1/3 of the position at $34.11 which was filled the following day.
By early July (point 7) the $36 level had been exceeded and the stop was raised to $33.34, which was under the early June low of $33.85. The correction into the end of July had a low of $34.34 as prices once again accelerated to the upside with a high on August 1 of $37.64. A few days after the highs at point 8, the stop was raised to $34.08 just under the previous correction low.
The correction into the early September held above the $36 level and by September 13 AT&T had made a new high at $38.21. The following day I raised the stop to $35.82, which was under the last swing low. As AT&T surged in the latter part of September, I decided to take some additional profits and on October 1 I recommended selling another 1/3 of the position, which was filled at approximately $37.75.
This seemed like a good strategy but since I had only 1/3 of a position and because of its attractive yield of 4.7%, I recommend a lower stop at $34.48 and paid the price as I should not have changed it. As it turned out the remaining position was stopped out on October 24 as all the dividend stocks were being liquidated.
I hope these examples will help you better place you stops and avoid some of the many pitfalls that investors as well as traders encounter. Of course the most important step is the choice of the initial stop and the entry level, which allows you to calculate the risk.
I have found the starc band analysis to be very helpful in keeping me from buying too high, which is a problem for most. The high entry level is often accompanied by a stop that is too tight. Therefore many positions are stopped out just before they move in the direction that was originally expected.
I am planning to do an additional article on this subject and therefore would appreciate hearing your comments and suggestions (TomAspray@moneyshow.com.) Some of the nuances that I use in placing and moving stops have been developed in over 30 years so I think additional examples may be beneficial.