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Re: Margin Calls and Rejected trades

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<DIV><FONT face=Arial size=2>I think the Rejected Trades would be for trading 
futures, where you calculate how many contracts you can buy, and it's less than 
one contract. That explains the number for a low risk situation; I'm not sure 
why there is a larger number of rejected trades for the highest risk in his 
table. Perhaps he doesn't have enough money to take that much risk?</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT>&nbsp;</DIV>
<DIV><FONT face=Arial size=2>For stocks, I don't think you'd reject any trades 
because the number is less than one share, but if you wanted to risk a large 
amount on each trade, the dollar amount could exceed the "buying power" 
available to you. That's would explain that bottom row in his tables. He'd be 
unable to buy enough shares to risk that amount.</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT>&nbsp;</DIV>
<DIV><FONT face=Arial size=2>I think Margin Calls is the result of simulation. 
He was able to buy, but the drawdown would have caused a margin 
call.</FONT></DIV>
<DIV><FONT face=Arial size=2></FONT>&nbsp;</DIV>
<DIV><FONT face=Arial size=2>Mike</FONT></DIV>
<BLOCKQUOTE dir=ltr 
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  <DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B> 
  <A title=bhanjar@xxxxxxxxxxxxx href="mailto:bhanjar@xxxxxxxxxxxxx";>Dr. 
  R.BHANJA</A> </DIV>
  <DIV style="FONT: 10pt arial"><B>To:</B> <A title=metastock@xxxxxxxxxxxxx 
  href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx</A> </DIV>
  <DIV style="FONT: 10pt arial"><B>Sent:</B> Monday, August 07, 2000 10:44 
  AM</DIV>
  <DIV style="FONT: 10pt arial"><B>Subject:</B> Margin Calls and Rejected trades 
  </DIV>
  <DIV><BR></DIV>
  <DIV><FONT size=2>In his excellent book of "Trade your Ways of Financial 
  Freedom" Dr. Van K. Tharp has given some Position Sizing models (Model-1 =&gt; 
  One Unit per Fixed amount of money; Model-2 =&gt; Equal value Units for Stock 
  Traders; Model-3 =&gt; The Percent Risk Model;&nbsp; Model-4 =&gt; The Percent 
  Volatility Model) in chapter 12. He compared all the models along with the 
  data of Net Profits, Rejected Trades, % Gain per Year, Margin calls, Maximum 
  Drawdown. I cannot understand how to compute the Margin Calls and Rejected 
  Trades.</FONT></DIV>
  <DIV><FONT size=2>For example in Model-1 the unit (no. of contracts or no. of 
  shares per unit) is fixed to 1 and the amount of money is fixed (say $X in the 
  equity) and position may be taken irrespective of the risk. So say in a equity 
  Z the no. of $X = Z / X hence the number of units is also same as no. of $X. 
  Now if one unit cost is more than $X then should it be called margin calls or 
  rejected trade. </FONT></DIV>
  <DIV><FONT size=2>Perhaps many of this forum has gone through this book. Can 
  any body like to explain how to compute them. With thanks</FONT></DIV>
  <DIV><FONT size=2>BHANJA</FONT></DIV></BLOCKQUOTE></BODY></HTML>

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