|
PureBytes Links
Trading Reference Links
|
Al,
Your example illustrates Van Tharpe's Position Sizing very well. A
3.3% stop loss ($30 to $29) would let one "risk" $30,000 of a
$100,000 portfolio. I follow the logic, but in real life I would not
put that much into a single stock -- due to the risk of a big gap
down. I realize the purpose of your post was to show that position
sizing does not require small positions in a multitude of stocks. I
agree with that.
But in addition to the 1% or 2% limit on a single trade, I also add
a 10% rule: no more than 10% in a single stock no matter how good
the reward/risk ratio looks or how big a position the 1% rule allows.
b
|