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Mike:
Please clarify your terminology. In item 2) below, "you'd be 250%
invested". Don't you mean 250% at risk. You can be only 100% invested. By
leveraging and risk factors, you can be at risk for more than 100% of your
investment.
Lionel Issen
lissen@xxxxxxxxx
----- Original Message -----
From: Mike Lucero <mikelu@xxxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Thursday, July 13, 2000 9:32 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
>
>
>
>
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