Traders' Roundtable

Many thanks Jake for that clear explanation. You are right that it should not matter what % of total account is invested in a stock as long as the risk is just 1% od the total account. If I want a maximum of 20 stocks in the portfolio (which according to EMH will diversify away the specific risk) I ...

Could someone please explain how to convert the % volatility position sizing to fixed fractional. Someone posted that c.f. had written apaper on this but I cant seem to find it. Risking only 1% of equity sometimes means that I have to invest over 10% in one single stock position which for me is a bi...

Many thanks for the replies. I now understand the % risk to total equity, however the amount invested in a position as a % of the total portfolio would just be too high. You need to be able to sleep at night. If I were to run a 30 stock porfolio, I would invest 1% of the portfolio in each trade and ...

Many thanks Kiwi,

I would use a 2ATR stop for each poistion.

Referring to 1%, I have read that each trade should not be more than 1% of equity, in this case £1000.

Hope this helps.

Regards,
Bunter

Assume I have two stocks and a £100,000 account. Stock A Price 200p ATR= 10p Stock B Price 150p ATR= 12p Stock B is more volatile at 8% than Stock A at 5%. Using a 1% volatility I can calculate the number of shares to buy as follows Stock A 1% of £100,000/10p= 10,000 shares at a cost of £20,000 S...