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Re: [EquisMetaStock Group] Money Management for Ralph Vince's"Portfolio Management Formulas"


  • To: chichungchoi <equismetastock@xxxxxxxxxxxxxxx>
  • Subject: Re: [EquisMetaStock Group] Money Management for Ralph Vince's"Portfolio Management Formulas"
  • From: Code 2 <Code2@xxxxxxx>
  • Date: Tue, 10 Aug 2004 10:23:23 -0700

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Eric:

Optimal f is simply a method of analyzing risk and reward, with the
goal being a definition of an appropriate position or bet size.

The trading system you develop will give you the stream of profitable
and losing trades on which to calculate Optimal f and, therefore,
position size.  It's up to you to develop the trading system that
gives you the profit/risk you desire.

Just to clarify, Ralph Vince doesn't necessarily advocate a 2:1
profit-to-loss ratio.  A consistent 1.05:1 ratio works just as nicely
as a 2:1 or even a 3:1 ratio, when Optimal f is used to compute the
optimal position size.



From: chichungchoi <no_reply@xxxxxxxxxxxxxxx>
To: equismetastock@xxxxxxxxxxxxxxx
Date: Tuesday, August 10, 2004, 2:15:26 AM
Subject: [EquisMetaStock Group] Money Management for Ralph Vince's "Portfolio Management Formulas"

According to Optimal f. Read Ralph Vince's "Portfolio Management 
Formulas", Now, I know this formula, but one thing I don't 
understand is to find any $2 profit with $1 risk opportunity.  
Profit and risk depend on support and resistance levels, but those 
levels have no clear solid definition on where it is. How do I know 
which conditon will fit for the opportunity of $2 profit with $1 
risk? If I think current condition is $2 profit with $1 risk, but 
other people will see it $1 profit with $1 risk.  It is very 
depended on the levels of support and resistance.  Does anyone have 
any idea?
Thank you
Eric 





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