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Yes, I was thinking of Tharp as a place to start, too. Just don't take him
too seriously. The numbers he uses are not replicable, and every time he
mentions "expectation" he defines it differently. But he listened to a lot
of smart traders and he copied down some good stuff. And check out on the
web what people think about his courses before you lay out any money on
them.
Also look up "portfolio heat" on the web. There's an article by Ed Seykota
in Stocks and Commodities that is copied in a number of places. - even if
your position size is right, the total risk position is key. And if you want
to see a system with highly developed portfolio risk management rules look
at the original turtle trading rules. They weren't successful because of the
entry system, they were successful because of the portfolio management
discipline.
Andrew
-----Original Message-----
From: Richard Dale [mailto:richard@xxxxxxxxxxxxxxx]
Sent: Saturday, July 24, 2004 12:53 AM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: RE: [EquisMetaStock Group] Money Management for Trading
Have a read of Van Tharp's "Trade Your Way to Financial Freedom" and
consider a % of capital model with volatility-based stops. 2% seems to be a
good compromise between safety and chance of ruin. 1% is better for large
capital bases. 4% is required if you have a small capital base.
The exact level you choose should be based upon your system's expectancy and
win/loss ratio. Read the book for a few hundred pages of discussion about
different position sizing models.
Best regards,
Richard Dale.
Norgate Investor Services
- Premium quality Stock, Futures and Foreign Exchange Data for
markets in Australia, Asia, Europe, UK & USA - www.premiumdata.net
<http://www.premiumdata.net/>
_____
From: chichungchoi [mailto:no_reply@xxxxxxxxxxxxxxx]
Sent: Saturday, 24 July 2004 2:23 AM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: [EquisMetaStock Group] Money Management for Trading
Does anyone know how to determine the best % of capital for trading?
in order to let the profit grow faster and let the loss shrink
faster. Thank you
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