AIM UK

[ls7550]

RE: Applying the cWave based method outlined in the iBox to individual stocks.

The FT100 example I've recently added at the bottom of the iBox that shows a ROCAR of 150% provides an indication of how the cWave might be applied to individual stocks.

For each candidate stock you need to use the cWave * 1.5 amended value for calculating the bottom price level e.g. bottom price = current price * ( 1 - ( cWave factor * 1.5 ) ) against historical price levels. In each case having identified the historic stock price level and the cWave based indicated bottom price level associated with that date, you then have to partition the range between those two prices using whatever step size you believe to be reasonable (perhaps 25%) and then compare the current dates price to see if it is below any of those down step price levels.

On identifying potential candidates you then have to make a judgement whether the stocks relatively lower price is justified, may continue lower, or has the potential to recover (a good sign is if the stocks price has already been exhibiting some relative strength). If you believe that the potential for a recovery is good then that's a candidate stock that can immediately be bought into with part (or possibly even all) of allocated funds according to the indicated cWave based calculated amount to invest (as though you'd originally starting monitoring that stock back at the historic date and have observed a current buy signal). Repeating such plays across time might provide actual total returns that approach that of the 150% type annualised ROCAR level as indicated in the iBox example.

For US stocks Tom's Perverse PIC list candidates might be a good place to start. That said I can't speak from personal experience as I don't trade individual US stocks, only UK stocks.

But be warned, some will not work out as expected and you may end up being 100% buy-and-hold in a stock that has a lower price than your averaged down price level, so you either have to be prepared to only pick stocks that you are reasonably content to possibly hold for the mid to longer term, or add in additional exit at a loss conditions for when things don't work out as expected.

Trading individual stocks in this manner is much more speculative (higher risk of a loss go hand-in-hand with potential higher rewards) and therefore should perhaps only be applied to part of your overall total investment funds.

No guarantees, and don't blame or seek recompense from me if it doesn't work out. I'm not registered to provide financial advice... consult an independent financial advisor before using .... and all the other usual disclaimers apply.

Clive.