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This is good advice - and its not just for advanced traders. If you do this
at the beginning it may keep you alive for long enough to start to make
money.
I use a position size maximum of 1% of equity and calculate the number of
shares based on 4 times the 10 day ATR. I build this into my daily
explorations so that I can just take my end of day equity, divide by 100 and
then divide by the 4*ATR figure for that stock. You can do something similar
for futures - for all those turtle admirers out there, you'll find something
similar in the turtle rules.
Do this and then one day your capital account range can go up to $10 million
like superfragilist's!
Andrew
PS Does a whimpering wimp become a whimp? How about if you whomp a
whimpering whimp with a whip?
-----Original Message-----
From: superfragalist [mailto:no_reply@xxxxxxxxxxxxxxx]
Sent: Tuesday, January 11, 2005 1:26 AM
To: equismetastock@xxxxxxxxxxxxxxx
Subject: [EquisMetaStock Group] Free Position Sizing Code
Speaking of position sizing, here's a little position size code
indicator you can plot before you buy a stock. It will tell you how
many shares you should buy based on your risk level and the ATR of
the stock. If you want to know more about how this works, read about
position sizing using volatility. You can make other indicators from
it that tell you how much you're going to invest in that stock, etc.
Have fun! And it's FREE, FREE, FREE.
Make an indicator out of this. Name it whatever you want! I like to
call mine Black Hole for Money Indicator
CapitalAccount:=Input("Size of Capital Account",5000,10000000,100000);
RiskPercent:=Input("Account Risk Tolerance in
Decimals.",0.001,100,0.01);
VT:=Input("ATR Periods for Calculating Volatility.",1,100,10);
Bars:=Input("Number of Bars for Smoothing ATR.",2,100,10);
WhimpFactor:=Input("Personal Risk Profile-1 Cowboy to 7 Whimp",1,7,3);
x:=Mov(ATR(VT),Bars,S);
RiskPercent*CapitalAccount/(x*WhimpFactor)
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