V.7:12 (428-430): Tactical stock trading by Hugh L. Logan

V.7:12 (428-430): Tactical stock trading by Hugh L. Logan
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Tactical stock trading by Hugh L. Logan

Peter Eliason's stock trading technique ("Tactical stock trading," Stocks & Commodities, March 1989 and "Volatility analysis and simulation used in tactical trading," Stocks & Commodities, July 1989) sounded so interesting I immediately sat down and began experimenting. Others have questioned the consequences of using the technique on a downtrending stock (see Letters to the Editor, Stocks & Commodities, May, July and September 1989) although Eliason has repeatedly cautioned users to use strategic techniques (as distinguished from tactical techniques) to guard against being wiped out by large downtrends.

I found an approach that improves the chances of getting out of a downtrending stock with a profit and doesn't give up too much if a stock goes into an uptrend.

Tactical trading

Eliason's trading technique begins with a series of numbers such as 1, 2, 3, 4, 5, 6. To determine the number of shares to own, add the first and last numbers in the series (the extreme numbers) and multiply that sum by a "base number" of shares. If I assume the base number is 100, the initial buy is [ 100 (1 + 6)] = 700 shares. The per-share price of this first transaction Is my "action price."

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