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Re: [EquisMetaStock Group] Van Tharp's Money management (%Volatility Model) : need help !!!



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Marco,
 
For what van Tharp's rubbish is worth, assuming 50K USD and purchasing microsoft, then Microsoft is trading at 24.31 with a daily range of 0.5. Lets say that the ATR for the last 10 days is 0.5. Then the volatility is 50 USD per hundred shares. Using  his 2% of equity at risk i.e. $1000.  Thus using his logic you would buy 2000 shares - assuming your stop was placed 1 ATR below the  purchase price.
 
I would counsel you to have a read of Cynthia Kase's book. The piece on Dev stops is well worth the purchase price in its own right.
 
----- Original Message -----
From: khamsina11
Sent: Monday, March 21, 2005 9:52 AM
Subject: [EquisMetaStock Group] Van Tharp's Money management (%Volatility Model) : need help !!!


Hi,

I am currently reading Dr Van Tharp's book
"Trade Your Way to Financial Freedom" and I just can't understand his "Percent Volatility Model" for stock trading (he gave examples with futures but unfortunately not with stocks !).

Might anyone explain me with a example his "Percent Volatility Model" applied only to stocks.

Thanks in advance for your help,

Regards,

Marco


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