![]() For example if I decide Im comfortable risking 2% of my $50k account equity and my stop loss is 10% on a $60 stock or $6. It gives all trades an equal risk and allows a steady portfolio growth. The percent risk model – This model is recommended as the best model for long term trend followers. For example dividing my $50k equally into 5 and investing $10k into each stock or strategy. Its commonly used by investors and equity traders. Equal units model- This model gives an equal weighting to all investments in your portfolio according to their underlying value. For example trading 100 shares for every $50k in my account. It basically treats all investments alike and always allows you to take a position. He describes 4 position sizing methods: Units per fixed amount of money- This model allows you to take one position per so much money. Van Tharp goes over the effects that different position sizing strategies have on the same trading strategy. ![]() If you haven’t read this book, do yourself a favor and read it! From page 284 to the end of the book Dr. Ripe Trade Im sure most of you have read Dr Van Tharps book Trade your way to financial freedom. ![]()
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