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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 -----
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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