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[EquisMetaStock Group] Re: Money Management



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If I just follow the triggered BUY/SELL signal and not concern about 
the support and resistance levels, 

1) The account size is $25,000.
2) The largest losing trade is $2,050.
3) The Optimal f is 27%. 

Should I just buy long $25,000 x 27% = $6,750 for 6750 share at $1? 
and sell short $25,000 x 27% = $6,750 for 6750 share at $1? 
Could you please give any suggestion?
Thank you
Eric

--- In equismetastock@xxxxxxxxxxxxxxx, "Raymond McBoyd" 
<rmcboyd@xxxx> wrote:
>  
> To apply the Optimal f and find the optimal value to risk for an
> account, follow the steps below: 
> 
> ?Establish the account size. This is the starting account size and
> should be obvious to traders. 
> ?Establish the size of the single largest losing trade. Traders will
> need to look at the trades to figure this out. 
> ?Use the included software to calculate the Optimal f 
> ?Divide the largest loss by the Optimal f. ?Divide the account value
> by the results of step 4. 
> ?Repeat after each trade. 
> 
> The results from step 5 will tell traders how many units/contracts 
to
> take on each trading signal for maximum growth to their accounts. 
Here's
> a real example: 
> 
> ?The account size is $25,000. 
> ?The largest losing trade is $2,050. 
> ?The Optimal f is 27%. ?$7,592 = ( $2,050 / 0.27 ). 
> ?3.29 units = $25,000 / $7,592. 
> 
> When comparing the Optimal f value of two systems, all other things
> being equal, it is wise to pick the account with the larger value. 
The
> system with the largest Optimal f value will have the potential to 
grow
> the quickest, if the proper Optimal f Position Sizing 
technique/approach
> is used. 
> 
> The Optimal f graph is usually displayed as an arch. The optimal 
value
> is the peak of the curve. This peak is usually called the Optimal 
f. In
> this optimal value lies the tools for growing an account the 
fastest.
> But it is necessary to go through the steps above before the data is
> truly useful to traders.
> 
> I hope this is helpful
> 
> Ray
> 
> 
> > Message: 4         
> >    Date: Tue, 10 Aug 2004 09:15:26 -0000
> >    From: chichungchoi
> > Subject: 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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