|
PureBytes Links
Trading Reference Links
|
Thank everyone for suggestion.
Could you please explain a little bit more for your approach on
allocateing capital according to individual risk exposure?
Thank you in advance
Eric
--- In equismetastock@xxxxxxxxxxxxxxx, "Jose Silva" <josesilva22@xxx>
wrote:
>
> > Many people use 1~3% risks for their investment, but does anyone
> > know why?
>
> No one knows what lurks in the minds of traders, otherwise we could
> preempt the public and become quite wealthy practically
overnight. ;)
>
> I suspect that the main reasons for a fixed (1%~3%) trade capital
> allocation are based on a misunderstanding of risk, or an inability
to
> measure and act on risk properly.
>
> The main reason for capital allocation (money management), is to
> control risk to some extent.
>
> Allocation of capital (i.e., exposure to risk), should be done on
an
> individual security basis. That is, look at individual trade
history
> for each security, and allocate x% of capital to it according to
> historical risk.
>
> For example, a risky/volatile stock may require caution and a
smaller
> capital outlay, whereas a more stable/trending security with less
> historical risk, can cope with a larger trade size.
>
> In other words, don't allocate capital % on hearsay or fixed
> percentages. Be smarter, and allocate capital according to
individual
> risk exposure.
>
> More on this in the current issue of MSTT.
> http://www.metastocktips.co.nz
>
>
> jose '-)
> http://www.metastocktools.com
>
>
>
>
> --- In equismetastock@xxxxxxxxxxxxxxx, chichungchoi <no_reply@>
> wrote:
> >
> > Many people use 1~3% risks for their investment, but does anyone
> > know why? Does it have any approach to determine the risk level
> > based on the performance of any strategy?
> > Thank you in advance
> > Eric
>
------------------------ Yahoo! Groups Sponsor --------------------~-->
Try Online Currency Trading with GFT. Free 50K Demo. Trade
24 Hours. Commission-Free.
http://us.click.yahoo.com/RvFikB/9M2KAA/U1CZAA/BefplB/TM
--------------------------------------------------------------------~->
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/equismetastock/
<*> To unsubscribe from this group, send an email to:
equismetastock-unsubscribe@xxxxxxxxxxxxxxx
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
|