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Al
When I refer to our investment, we take the entire position at one time.
Occasionally we may add to positions, but that's not normal for us.
I did add a note to one of my answers concerning position size where I go
through how we calculated our one-third level. If you take our total
investment capital, including all non-futures accounts, we're really running
8.39%. It's just that we don't think of it in that fashion since we keep
futures totally separate from equities.
Guy
Paranoia...you only have to be right once to make it all worthwhile!
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of Al Taglavore
Sent: Wednesday, July 12, 2000 11:31 AM
To: MetaStock List Group
Subject: Trade size Question
In reading all of the many "risk of ruin" posts and the different
commentaries as to trade size, I have a simple question to ask. When a
committment is made to allocate "x" dollars(or percent) to a trade, this
does not necessarily mean that the dollar/percentage of capital has to be
committed in one order, does it?
I almost always scale in and scale out of a trade. I may have three to
five orders that will constitute one trade. If my opening order is
profitable, I will then add to a winning position. If I am wrong, I will
accept that I am wrong, take the loss, which will usually be small, and
look for another trade. In this manner, I have often commited 25% of my
trading account to one position, but the position is built by adding size
from a point of profit. (Seldom will I use margin to trade)
Should this type of entry not be given consideration rather than to make a
hard statement that one will commit "X" percent of capital to a trade?
Sure seems like it is more risk adverse to approach a trade in this
manner....commission is a lot cheaper than the loss of points. Also, I
have been taught that capital preservation should be the first goal.
Al Taglavore
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