Best Choice Software

Short Term Exit Stops

To get to here, click the Program Options button on the upper toolbar, which is the second
button from the left. Then click the Exit Stops tab.

The button has looks like a grid with buttons and switches, and is labeled "Program Options"

Overview

This screen allows you to select what type of stops you wish to use to exit your stock positions.

Getting Started

Using this screen is easy. Just put a check in the box next to the stops you wish to use by clicking the little white box next to it. You can just use one stop, or select any or all of them at the same time. If you select more than one stop, then during the trade, the program will check all the stops and use the one that is closest to the close of each day.

Once you have clicked a box next to the stop you wish to use, a box to the right of the stop description will become visible. You can keep the default parameter for that stop, or change it to meet your criteria.

For exit stops that have a $ next to them, you will need to enter a dollar amount. For exit stops that have a % next to them, enter a percentage with a integer value. For example, to enter five percent, you would put a 5 in the box, not .05. Click here to see a description of all the different types of exit stops.

It is important to realize that setting these stops are only for the program to let you know where to put your stops in your current trade. You are responsible for contacting your broker and changing your current exit stop position in your current trade.

Saving Your Changes

Once you have made all the changes you would like, click the Save Excellent Rating button.

Reindexing The Database

It is very important to realize that you have now changed the way the program works. The exit stops are different, so two things will happen. One, they way the trades are calculated in the short term will change. IBM in the last few months may have been a "Good" stock for the last three months before you changed the exit stops, and now may be only a "Marginal" stock for the last three months with the new changes you made to the exit stops. This is because when you pull up a chart for a stock, the program goes through the entire time period you are currently looking at and calculates all the trades that would have happened based upon the current program options. So when you change the program options, it will change the trades.

The second thing that will happen is that you will now have to reindex the database before you use the Wizard to do a short term search. If you don't plan to use the Wizard in the near future to do any short term searches, then don't worry about reindexing for now, but you will need to reindex before you decide to perform a short term search using the Wizard again.Changing short term settings will not affect long term searches in the Wizard. Click here to learn more about reindexing. If you haven't read this before, it would be a good idea to do it now.

Please realize that reindexing only affects the searches in the Wizard. Reindexing does not affect what you are seeing on the charts. The information on the charts is only affected by what you have chosen to see by changing the program options.

Restoring the Default Settings

If, after you have played around with these settings, you wish to restore all the short term exit stops back to the original program defaults, just click the Restore and Save Default Exit Settings button. If you wish to return all the program options in best choice to their original default values, click here to find out how.

Descriptions

The following are the descriptions for each of the exit stops.

1. $ Behind the Close

This places the exit stop a certain dollar amount behind the close, depending on what type of position you are in (long or short). The default is three dollars.

For example, say todays close was at $27.53 in a trade you are long (bullish), and your $ Behind the Close exit stop was set at the default, three dollars. The program would automatically mark your new stop for the current position at $24.53. If you were short (bearish), then the program would mark your new stop at $30.53. You would then contact your broker and update your position with the new stop price.

2. % Behind the Close

This places the exit stop a certain percent amount behind the close, depending on what type of position youare in (long or short). The default is five percent.

For example, say todays close was at $20 in a trade you are long (bullish), and your % Behind the Close exit stop was set at the default, five percent. Five percent of $20 is $1, so the program would automatically mark your new stop for the current position at $19. If you were short (bearish), then the program would mark your new stop at $21.00. You would then contact your broker and update your position with the new stop price.

3. $ Above High/Below Low

This works just like the $ Behind the Close, except it puts the exit stop a certain dollar amount below the low of the day if you are long. If you are short, then it would put the exit stop a certain dollar amount above the high of the day.

For example, say todays low was at $36.50 in a trade you are long, and your $ Above High/Below Low exit stop was at the default, $0.125. The program would automatically mark your new stop for the current position at $36.375. If you were short, and the high was $37.00, then the program would mark your new stop at $37.125. You would then contact your broker and update your position with the new stop price.

4. % Above High/Below Low

This works just like the $ Above High/Below Low, except it puts the exit stop a certain percentage amount below the low of the day if you are long. If you are short, then it would put the exit stop a certain percentage amount above the high of the day.

For example, say todays low was at $30 in a trade you are long, and your % Above High/Below Low exit stop was at the default, six percent. Six percent of $30 is $1.80. The program would automatically mark your new stop for the current position at $28.20. If you were short, and the high was $30, then the program would mark your new stop at $31.80. You would then contact your broker and update your position with the new stop price.

5. % Profit Locked In

This exit stop keeps a certain percentage of profit locked in the trade. For example, say we are long MSFT, we bought at $20, and todays close was at $30. We have a $10 profit so far. If our % Profit Locked In is the default, fifty percent, then the close would automatically be placed at $25, because fifty percent of our $10 profit so far is $5.

6. Back of the Close Risk Reduction

This exit stop is only used until we are profitable, or in other words, for the first day or two while our exit stop is still in the negative (hasn't moved past our entry), the program will automatically put the stop a certain price amount behind the close to reduce our initial risk.

For example. lets say we bought (went long) CSCO at $20 on day one, and our initial exit stop was at $19. Then, on day two, CSCO closed at $20 again. If our default was being used for this exit stop, twenty five cents, then our exit stop would automatically be put at $19.75, twenty five cents behind the close to reduce our risk from one dollar to twenty five cents.

7. # of Days Pivot Stop

This places an exit stop below the previous low pivot point of the stock price if we are long, and above the previous high pivot point if we are short. Please click here for a definition of a pivot.

8. # of Days Behind Close

This exit stop is pretty self explanatory. If this exit stop is selected, and you are using the default of two days, then the program will automatically put the exit stop at the closing price two days ago.

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