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Well, as it
turned out, I subscribed to GetFolio.com. His emphasis is on risk control
and small initial positions. But he has a very neat plan worked out where
on the top of market cycle he is mostly in cash, at the bottom of the cycle he
is mostly invested. He does this by buying well known big companies when
they are down and more are down when the market is too. Then he sets sell
targets so when the market rises, positions are closed and cash is
raised.
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He emphasizes
money management and if any position gets out of hand (too big in relation to
other positions), he will lighten up the position. When you get into the
site and figure out just how he does it, it's like, "wow, why hasn't anyone
done it this way before".
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size=2>
This is a simple
explanation of what he does. One would really need to subscribe to his
site to get the whole picture. His way of doing money management is not
Van Tharp. He has his own unique ideas.
<FONT face="Vladimir Script" color=#000080
size=5>Rick
<FONT face=Tahoma
size=2>-----Original Message-----From: Herman van den Bergen
[mailto:psytek@xxxxxxxx]Sent: Tuesday, September 23, 2003 10:13
AMTo: amibroker@xxxxxxxxxxxxxxxSubject: RE: [amibroker]
*OFF TOPIC* Position Sizing at GetFolio.com
<FONT face=Arial color=#0000ff
size=2>MONEY MANAGEMENT, ahh such a sweet controversial topic
:-)))
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size=2>
Can
somebody enlighten me?
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size=2>
1)
With an avarage of 1% per trade (why per trade and not per position?), do we
have to trade 100 stocks? Anybody on this list having 100 actively-traded
stocks in their portfolio?
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2)
At 1% per position one needs a sizable portfolio... 100 stocks priced at an
average of $20 and 500 shares would add up to $1,000,000 of actively
traded dollars. How many on this list do that? No answer expected
:-)
<FONT face=Arial color=#0000ff
size=2>
2)
If you have 1% invested in 100 stocks and the whole market dives, so will your
portfolio, i.e. if 50 stocks track the market you'll be down 50%. So how does
this 1% protect you against whole market dips?
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The
answer to the above is probably that 1) you must diversify in stocks/sectors
that make opposite moves but this is probably more difficult than money
management, 2) that your perfect trading system should get you out of
the market in time. Doesn't this mean that 1) and 2) are prerequisites to MM
and most be solved before the application of MM?
<FONT face=Arial color=#0000ff
size=2>
Now,
this doesn't mean I do not agree with money management :-) just that that the
way it is presented doesn't help the small tarder very much. Small (limited
budget) traders need to develop different typ of MM. <SPAN
class=046213313-23092003>What are the MM
rules for small traders?
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size=2>
For
short term trading I like to think along these lines:
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size=2>
1)
Use the best system possible; never stop trying to improve it. Aim for a high
% winners: it will keep you trading.
2)
Start each new stock small, a sudden large investment represent the risk of a
sudden large loss
3)
Use maximum loss stops that prevent you from ever dipping into your initial
equity.
4)
use profit stops, they can really improve system
performance.
5)
reinvest profits to reach maximum positionsize gradually
6)
increase your position size in small increments by increasing
the Positionsize with 1-2% extra cash with each trade
7)
use all the tools available to you: know your trader workstation and order
types, use conditional orders.
8)
diversify over sectors and stocks
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size=2>
With
AB version 4.5 we will probably see w whole new range of MM topics surface,
hopefully some that can be backtested better.
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>Happy trading,
<FONT face=Arial color=#0000ff
size=2>Herman.
<FONT face=Arial color=#0000ff
size=2>
Ps.
Yes, I have read some of the books on this topic but they all appear to be
written for fund managers, not for the small trader.
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Arial color=#0000ff
size=2>
<FONT face=Tahoma
size=2>-----Original Message-----From: Rick Parsons
[mailto:RickParsons@xxxxxxxxxxxxxxx]Sent: Tuesday, September 23,
2003 8:50 AMTo: amibroker@xxxxxxxxxxxxxxxSubject:
[amibroker] *OFF TOPIC* Position Sizing at
GetFolio.comImportance: High
There has
been much discussion regarding Position Sizing and how to implement it in
Amibroker. There is also a good discussion of Position Sizing in Van
Tharp's book.
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size=2>
Here is a
site that uses Position Sizing as it's main feature:
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size=2>
<A
href=""
target=_blank>Http://www.GetFolio.com
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size=2>
Does anyone
have any experience with this site and subscribe to it?
<FONT color=#000080
size=2>
<FONT color=#000080
size=2>Thanks,
<FONT face="Vladimir Script" color=#000080
size=5>Rick
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