|
PureBytes Links
Trading Reference Links
|
Am I right in assuming you're risking 30%, not just 30% invested?
If so, do you try to control the risk beyond the initial risk? On the
reversal day at the beginning of January, I had so much risk (distance from
stop) in one stock that I sold half the position just for that reason. I
haven't done any tests that take risk into account (I use Technifilter) ,
but my account has benefitted from using position sizing a la Tharp.
Mike
----- Original Message -----
From: "Mark Thompson" <mst1@xxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Friday, July 14, 2000 7:29 AM
Subject: Re: Gap risk = critical?
You are right about the drop at the end. it really stinks to lose 1/3 to
1/2 of the profit collected so far on a trade. However one (or at least
this one) cannot tell in advance which retracement is "the big one" that
takes you out rather than retracing and then moving ahead. I have back
tested a number of other methods but have not been able to outperform the
trailing stop that I use.
On the % of the portfolio, I ran my trades through an optimal f calculator
and came up with and "f" of 40%. I am not sure that I did it right or that
is fits since the trades are stock trades but based on the reading the
number made sence. Then for safety sake I cut the number back to 30% and
that is the portfolio exposure that I look for with this system.
I use Elliott wave, fib patterns, and classic trading patterns (double
bottom, triangle, rising wedge etc) as well in monitoring the market and
make some trades based on these things with capital that is outside the
money set aside for the system. However I have not found a way so far to
mechanize these processes in a way that is profitable.
Mark
----- Original Message -----
From: "Mike Lucero" <mikelu@xxxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Thursday, July 13, 2000 10:32 PM
Subject: Re: Gap risk = critical?
>
> 1) If you took on 25 positions at once, you would be risking 25*2%=50% of
> your portfolio.
> 2) Say your risk on an average stock was 10%, you'd be 250% invested.
>
> I do similar calculations to normalize the initial risk in each stock, and
> keep an eye on total initial risk, but after a stock takes off, I lose my
> risk control. I use a trailing 10-12 day low stop, but that can be a
pretty
> big drop at the end of a stock's run. I also try to follow M (William
> O'neill's Market) but do a poor job of getting out in a timely fashion.
>
> Mike
> ----- Original Message -----
> From: "Gitanshu Buch" <OnWingsOfEagles@xxxxxxxxxxxxx>
> To: <metastock@xxxxxxxxxxxxx>
> Sent: Thursday, July 13, 2000 2:21 PM
> Subject: RE: Gap risk = critical?
>
>
> >there is more of a "right" answer for
> >each individual according to his trading style and situation.
>
> we understand each other, then !
>
> > So FOR ME setting my risk as a
> >% of my total protfolio makes sense since I need to remain in the game
long
> >enough for statistics allow me to make money.
>
> clear
>
> >My plan is this. I use a momentum system to get me into the trade,
> >calculate the total dollars that I risk on the trade based at 2% of my
> TOTAL
> >portfolio, then set the stop based on a % of the entry price according to
> >the volitility of the stock I am trading and then use the math to
> >determine the # of shares to buy.
>
> So you could have 25 simultaneous positions with 50% cash without really
> risking much and on zero margin. Sounds good...
>
> I think all your earlier emails fall into place, given this data.
>
> Thanks for clarifying, you seem to know your stuff !
>
> Gitanshu
>
>
>
>
>
|