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Yes, I knew that. I would still not use any standing stops on day of
entry, and use only mental stops.
rgds, Pal
--- In amibroker@xxxxxxxxxxxxxxx, "Ken Close" <closeks@xxxx> wrote:
> Pal, thanks, interesting calculations. I assume you realize MFs
trade
> only at the close and "showing your hand" is not an issue. The only
> real issue is trading too frequently and getting penalized and/or
banned
> from trading the fund in the future. I assume you know this.
>
> Thanks again,
>
> Ken
>
> -----Original Message-----
> From: palsanand [mailto:palsanand@x...]
> Sent: Monday, December 01, 2003 8:27 PM
> To: amibroker@xxxxxxxxxxxxxxx
> Subject: [amibroker] Re: Mutual Fund Money Management
>
> Assuming your usable_margin is the same as the total equity when
you
> start your trading, ie., $50,000.00, the
>
> AVAILABLE_EQUITY(AE) = 0.1 * USABLE_MARGIN (UM);
> available_equity = 0.1 * 50000.00 = $5000.00;
>
> If you determine your Max_System_%_DD or Max_Trade_%_DD using AB
Back
> testing or MCS as 20% = 0.2
>
> POSITION_SIZE (PS) = AE / MAX_DRAWDOWN_% = 0.1 * UM / 0.2 = 0.5 * UM
>
> Position_Size = 0.1 * $50,000.00/0.2 = $25,000.00
>
> If you want to trade 3 MF's, then you would invest $8,333.00 per MF.
>
> Enter at opening range and/or at support/resistance depending on
> where the current price is at. This automatically takes care of
the
> volatility. Mental Stops on day of trade at 1 full point away from
> entry. Never reveal your positions. Exit after 20 minutes only if
> your mental stop is hit and you are still losing. Never show your
> stop on day of entry as this is equivalent to showing your hand in
a
> poker game and the specialist's would view that with glee. Use a
> 3BSMA stop from next session onwards.
>
> rgds, Pal
>
>
>
> --- In amibroker@xxxxxxxxxxxxxxx, "Ken Close" <closeks@xxxx> wrote:
> > Excuse me for asking a potentially dumb question, but what are
some
> > "accepted" rules of thumb for money management AFA mutual funds
are
> > concerned.
> >
> > I can see that you might risk say 2%, on a position, and know
what
> your
> > stop loss would be, and then divide the price per share of the
fund
> by
> > the loss level to approximate the number of shares to buy.
> >
> > But what about some of the other rules of thumb, like do not risk
> more
> > than 3% of total equity on a position. Or does this apply to the
> stop
> > loss? Seems like 3% might be a small (too small?) amount for a
> mutual
> > fund position. I do not know. It depends on the size of your
> portfolio
> > of course. What if you have a $20,000 portfolio? What if you
have
> a
> > $2,000,000 portfolio. A $60,000 MF purchase out of a $2M
portfolio
> does
> > not "seem" to be the right "proportion", or is it?
> >
> > Also, what about the inherent volatility reduction that occurs
with
> the
> > multiple stocks in a fund?
> >
> > What about the number of funds to own at a single time? How
would
> you
> > go about figuring this out, given high correlation among the
funds?
> > ....or given low correlation among the funds?
> >
> > Is it better to divide a given amount (say $100K) among two
similar
> > funds ($50K each) ,or is it better to plunk the entire amount
into
> the
> > one fund? Would you increase the number of different funds given
> > increasing size of total portfolio funds?
> >
> > Again, maybe a whole series of dumb questions but what do some of
> you
> > more experienced money management folks have to say for this?
> >
> > Thanks,
> >
> > Ken
>
>
>
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