Friday, May 07, 2004 12:23:30 AM
Milestone -- Part 5
Here is a description of how Milestone would have handled a position in NEOP during April of 2004. Although Milestone brings stock prices out to 4 digits, I have used only two here for simplicity (and apparently NEOP trades in whole cents anyway). I have reproduced the zigzag chart of NEOP for that period below. Also, if you get tired of reading the play by play, there is a summary of all the trades at the end.
Ready? Ok, follow the bouncing ball…
The First Day
Remember from my previous post on NEOP that we started the Milestone position on March 31, when NEOP had declined from a peak of 1.10, past the first “buy milestone”, and down to a price of 0.95. At this point, when I enter all the initial information in for the new position, Milestone gives me these instructions for these prices:
SET A BUY STOP AT 0.97. BUY 350 SHARES AT THAT PRICE OR ABOVE
COME BACK FOR INSTRUCTIONS IF THE PRICE DROPS BELOW 0.92
Later in the day, the price drops to below 92, so I get new instructions:
BUY STOP AT 0.93
NEW INSTRUCTIONS AT 0.89
The price drops again on the same day, and again I have to reset my alerts. This time the buy stop is at 0.90 and the reset alert for new instructions is at 0.85.
April 1
On this day, the price rises and hits my buy stop. I buy 350 shares at 0.91 and go back to Milestone to report this. Milestone tells me that we are now in neutral mode. It also tells me that my next buy milestone is at 0.85 and that my reset point for new instructions is at 1.02.
April 2
The price never reaches 1.02. It gets as far as 0.99 then turns back around. No sale for me yet! My alerts are still set at 1.02 and 0.85 (the buy milestone). Neither gets triggered until April 5.
April 5
Today, the lower alert at 0.85 is triggered. I look at the stock and see that it is now down to 0.84. I go back to Milestone and report this. Milestone informs me that I am now once again in buy mode. The instructions are to set a buy stop at 0.85, and to buy 800 shares if that price is hit. The reset point is set at 0.81. Notice that the impending buy quantity is now higher! This is because Milestone won’t reset back to the minimum order amount until after a sale. Unless a sale happens, Milestone will keep signaling larger and larger buy orders the further the price drops.
April 7
The price is dropping all throughout this day, which means that the lower alert keeps getting hit. Each time this happens, I have to go back into Milestone for new instructions. Each time I do this, it gives me instructions to lower the buy stop and set a new lower alert. The buy stop is never hit, so I don’t end up making any purchases. Basically, Milestone is giving instructions that create a “trailing buy stop” as the price drops. When the price gets down to 0.70, something changes. When I report this to Milestone, I get these instructions:
SET A BUY STOP AT 0.72 AND BUY 1360 SHARES IF THE STOP IS HIT
SET AN ALERT AT 0.68 AND COME BACK FOR INSTRUCTIONS IF THAT IS HIT
Now this is what has been happening all day, except that the share quantity just went up again, from 800 to 1360! This is because another major “buy milestone” has been crossed. Before, the price was just crossing the stop order boundaries. These are shown in the chart below; the major “milestones” are the solid lines, and the stop order reset points are the dotted lines.
The price keeps dropping past 0.68, so I get new instructions from Milestone to change my buy stop to 0.69, and my reset point for new instructions to 0.65. The price never gets to that new lower level though. It turns around at 0.67 and starts climbing. My stop is hit! I buy 1360 shares at 0.70. I report this to Milestone and it tells me that we are now back in neutral mode again. I get instructions to:
SET AN ALERT AT 0.79. THIS IS THE SELL MILESTONE
SET AN ALERT AT 0.65. THIS IS THE NEXT BUY MILESTONE
Whew! Busy day.
April 8
The upper alert goes off as the price reaches 80. I report this to Milestone, which tells me that I am now in sell mode. Yay! The instructions are to set a sell stop at 0.78, and to sell 850 shares at that price or below. This is one-half of my total position. The upper alert will be set at 0.82, which will tell me to go back for new instructions.
Throughout the day, the price continues to rise, setting off the upper alerts. By the end of the day, my sell stop is at 0.87, and my next reset is up at 0.92. The price never makes it that high. It stalls out at 0.89.
April 12
The price drops down to 0.86, setting off my lower alarm. I know this is a sell stop, so I sell 850 shares at 0.86. I report this to Milestone, which tells me that I’m back in neutral mode again. It tells me that the next buy milestone is down at 0.75, and that the next reset level is up at 0.91, so I set alerts at these levels and wait. Notice that the upper alert is not a sell milestone. This is because I have fewer shares now, and in order to sell half of them and still get at least $300, the sell point would have to be much higher than 0.91. So Milestone hasn’t “found” the actual sell area yet. But if the price rises, Milestone needs to be alerted so that it can drag the buy area up behind it as it “searches” for the sell area. It always makes sure that the buy area is a reasonable distance away (in this case, 12% or less, since that’s what we chose as our Milestone percentage).
April 13
The price continues to rise. The alert at 0.91 is triggered, and Milestone gives instructions to move the buy milestone up to 0.80 and to set another reset alert at 0.97. This is STILL not a sell area, because 0.97 is still too low a price at which to sell. So Milestone is still searching, but as you can see, it’s keeping the buy area close behind the actual price of NEOP. When the alert at 0.97 is triggered, Milestone finally locates a sell area. Now the instructions are to move the buy milestone alert up to 0.85, and set the sell milestone alert at 0.99. Later on in the day, the upper alert is hit again, and now we are in sell mode! Milestone tells us to set a sell stop at 0.98 for 430 shares, and to set a reset alert at 1.03. A little later, the sell stop is hit! I sell the 430 shares, and report the sale to Milestone. Now we’re back in (you guessed it) neutral mode.
Summary
I think you get the idea, so I won’t continue with a day by day play by play! Here is a list of the orders that Milestone should have generated throughout most of April:
4/1 Buy 350 at 0.91
4/7 Buy 1360 at 0.70
4/12 Sell 850 at 0.86
4/13 Sell 430 at 1.01
4/20 Buy 3040 at 0.56 (this is a large purchase because NEOP passed several buy milestones)
4/22 Sell 1730 at 0.70
Not counting commissions, this leaves us with a total cash flow of negative $596.60, and a position of 1740 shares left, for an average cost per share of 0.34. So at the price of 0.70 on April 22, our profit is $626.40
Here is a description of how Milestone would have handled a position in NEOP during April of 2004. Although Milestone brings stock prices out to 4 digits, I have used only two here for simplicity (and apparently NEOP trades in whole cents anyway). I have reproduced the zigzag chart of NEOP for that period below. Also, if you get tired of reading the play by play, there is a summary of all the trades at the end.
Ready? Ok, follow the bouncing ball…
The First Day
Remember from my previous post on NEOP that we started the Milestone position on March 31, when NEOP had declined from a peak of 1.10, past the first “buy milestone”, and down to a price of 0.95. At this point, when I enter all the initial information in for the new position, Milestone gives me these instructions for these prices:
SET A BUY STOP AT 0.97. BUY 350 SHARES AT THAT PRICE OR ABOVE
COME BACK FOR INSTRUCTIONS IF THE PRICE DROPS BELOW 0.92
Later in the day, the price drops to below 92, so I get new instructions:
BUY STOP AT 0.93
NEW INSTRUCTIONS AT 0.89
The price drops again on the same day, and again I have to reset my alerts. This time the buy stop is at 0.90 and the reset alert for new instructions is at 0.85.
April 1
On this day, the price rises and hits my buy stop. I buy 350 shares at 0.91 and go back to Milestone to report this. Milestone tells me that we are now in neutral mode. It also tells me that my next buy milestone is at 0.85 and that my reset point for new instructions is at 1.02.
April 2
The price never reaches 1.02. It gets as far as 0.99 then turns back around. No sale for me yet! My alerts are still set at 1.02 and 0.85 (the buy milestone). Neither gets triggered until April 5.
April 5
Today, the lower alert at 0.85 is triggered. I look at the stock and see that it is now down to 0.84. I go back to Milestone and report this. Milestone informs me that I am now once again in buy mode. The instructions are to set a buy stop at 0.85, and to buy 800 shares if that price is hit. The reset point is set at 0.81. Notice that the impending buy quantity is now higher! This is because Milestone won’t reset back to the minimum order amount until after a sale. Unless a sale happens, Milestone will keep signaling larger and larger buy orders the further the price drops.
April 7
The price is dropping all throughout this day, which means that the lower alert keeps getting hit. Each time this happens, I have to go back into Milestone for new instructions. Each time I do this, it gives me instructions to lower the buy stop and set a new lower alert. The buy stop is never hit, so I don’t end up making any purchases. Basically, Milestone is giving instructions that create a “trailing buy stop” as the price drops. When the price gets down to 0.70, something changes. When I report this to Milestone, I get these instructions:
SET A BUY STOP AT 0.72 AND BUY 1360 SHARES IF THE STOP IS HIT
SET AN ALERT AT 0.68 AND COME BACK FOR INSTRUCTIONS IF THAT IS HIT
Now this is what has been happening all day, except that the share quantity just went up again, from 800 to 1360! This is because another major “buy milestone” has been crossed. Before, the price was just crossing the stop order boundaries. These are shown in the chart below; the major “milestones” are the solid lines, and the stop order reset points are the dotted lines.
The price keeps dropping past 0.68, so I get new instructions from Milestone to change my buy stop to 0.69, and my reset point for new instructions to 0.65. The price never gets to that new lower level though. It turns around at 0.67 and starts climbing. My stop is hit! I buy 1360 shares at 0.70. I report this to Milestone and it tells me that we are now back in neutral mode again. I get instructions to:
SET AN ALERT AT 0.79. THIS IS THE SELL MILESTONE
SET AN ALERT AT 0.65. THIS IS THE NEXT BUY MILESTONE
Whew! Busy day.
April 8
The upper alert goes off as the price reaches 80. I report this to Milestone, which tells me that I am now in sell mode. Yay! The instructions are to set a sell stop at 0.78, and to sell 850 shares at that price or below. This is one-half of my total position. The upper alert will be set at 0.82, which will tell me to go back for new instructions.
Throughout the day, the price continues to rise, setting off the upper alerts. By the end of the day, my sell stop is at 0.87, and my next reset is up at 0.92. The price never makes it that high. It stalls out at 0.89.
April 12
The price drops down to 0.86, setting off my lower alarm. I know this is a sell stop, so I sell 850 shares at 0.86. I report this to Milestone, which tells me that I’m back in neutral mode again. It tells me that the next buy milestone is down at 0.75, and that the next reset level is up at 0.91, so I set alerts at these levels and wait. Notice that the upper alert is not a sell milestone. This is because I have fewer shares now, and in order to sell half of them and still get at least $300, the sell point would have to be much higher than 0.91. So Milestone hasn’t “found” the actual sell area yet. But if the price rises, Milestone needs to be alerted so that it can drag the buy area up behind it as it “searches” for the sell area. It always makes sure that the buy area is a reasonable distance away (in this case, 12% or less, since that’s what we chose as our Milestone percentage).
April 13
The price continues to rise. The alert at 0.91 is triggered, and Milestone gives instructions to move the buy milestone up to 0.80 and to set another reset alert at 0.97. This is STILL not a sell area, because 0.97 is still too low a price at which to sell. So Milestone is still searching, but as you can see, it’s keeping the buy area close behind the actual price of NEOP. When the alert at 0.97 is triggered, Milestone finally locates a sell area. Now the instructions are to move the buy milestone alert up to 0.85, and set the sell milestone alert at 0.99. Later on in the day, the upper alert is hit again, and now we are in sell mode! Milestone tells us to set a sell stop at 0.98 for 430 shares, and to set a reset alert at 1.03. A little later, the sell stop is hit! I sell the 430 shares, and report the sale to Milestone. Now we’re back in (you guessed it) neutral mode.
Summary
I think you get the idea, so I won’t continue with a day by day play by play! Here is a list of the orders that Milestone should have generated throughout most of April:
4/1 Buy 350 at 0.91
4/7 Buy 1360 at 0.70
4/12 Sell 850 at 0.86
4/13 Sell 430 at 1.01
4/20 Buy 3040 at 0.56 (this is a large purchase because NEOP passed several buy milestones)
4/22 Sell 1730 at 0.70
Not counting commissions, this leaves us with a total cash flow of negative $596.60, and a position of 1740 shares left, for an average cost per share of 0.34. So at the price of 0.70 on April 22, our profit is $626.40
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