Re: [amibroker] Damage Control

["David Holzgrefe" <dtholz@xxxx>]

Dima Please publish or email me your smashBar 
reversal code from what I have heard to works quite well on asx stocks, even if 
it doesn't it would be well worth the look to learn from
 
Thanks David
 
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>From: 
Dima 
Rasnitsyn 
To: <A title=amibroker@xxxxxxxxxx 
href="">amibroker@xxxxxxxxxxxxxxx 
Sent: Tuesday, April 24, 2001 1:02 
PM
Subject: RE: [amibroker] Damage 
Control


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>Nate,
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>Thank 
you very much for sharing your experience.
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>What 
would be your advise for a beginning Commodity trader with [the standard] 
$5000 on the account? You can rarely (if at all) find a futures trade with the 
risk of less then $400 per contract (unless you day trade), According to your 
formula one should not take the trades with more then $100 
risk&#8230;
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>I was 
considering Larry Williams&#8217; money management recommendation (&#8216;Day Trade 
Futures Online&#8217;) of 
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>N 
contracts = Account Value * 0.12 / (maximum drawdown per contract), i.e. risk 
no more then 12% on the trade.
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>I will 
very appreciate your comments.
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>BTW, 
are there many futures traders on the list? <SPAN 
> I can share my 50Kb AFL code forthe 
trading system based on Larry Williams Volatility breakout Oops!, Smash Day 
Reversal, and other techniques. I am not sure those techniques are good for 
stocks&#8230;
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>Thanks,
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>Dima.
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>-----Original 
Message-----From: Dr.S. 
Nathan Berger [mailto:snberger@xxxx]<SPAN 
>Sent: Monday, April 23, 2001 6:39 
AMTo: 
amibroker@xxxxxxxxxxxxxxxCc: 
snberger@xxxx<SPAN 
>Subject: [amibroker] Damage 
Control
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>Essentially, 
Damage Control is this: Research shows the maximum amount 
you<SPAN 
>can 
lose on any single trade without damaging your long-term 
investmentcapital is 2% of your equity. So, if you have an 
account of, say,$20,000.00, then you can risk no more than 
$400.00 on any given trade. BTW,2% is aggressive. 1% to 1 1/2% is 
more conservative.Here is how to apply the rule in 
determining how many contracts or sharesto 
buy:Let's say you see an opportunity in ABC Widget Co. (ABC). 
Using whateversystem to determine the entry point, say $30.00, 
and the stop loss exitpoint, say $28.00. This means you are 
risking $2.00 per share of ABC.2% of your investment "nest 
egg" of $20,000.00 = $400.00. At $2.00 pershare, you can afford 
to buy no more than 200 shares of ABC.If you find an 
opportunity to purchase a contract on, say, lumber, at$250.00 
risk, you can only trade 1 contract; if the risk is $150.00 
percontract, you can afford to purchase 2 
contracts.I know-  you're thinking you can never get 
rich using such tightlimitations. Truth is, you can get rich, BUT 
IT WILL TAKE SOME TIME! Thekey is realizing that you can make 
money in the markets only as long as youare playing. When you're 
out of money, you're OUT OF THE GAME. If you finda deal that 
exceeds these limits, pass on it. It pays great dividends towait 
for trade opportunities that permit tight stops.Hope this 
helps...Nate Berger<FONT 
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