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  #21 (permalink)  
Old 04-02-2011, 05:54 PM
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Originally Posted by kkseal View Post
If i'm scaling into a stk in 3-4 tranches with 10, 20, 40 percent of the capital i want to allocate to it at progressively lower prc points/supports, then what am i doing? Is it something akin to the Martingale way of betting?

What about the remaining 30%? Would 'On the way up at the avg price (of the 1st 3 tranches)' be a good idea?

If you're trading positional on a larger time frame- 2-6 months, this may work well. Hopefully I've understood it correctly and you mean something like accumulation or continuity trades.

From my experience, adding on the way up does not helps unless a certain event occurs- say a particular price pattern on which you can raise your stop as well.

PS: a particular trade management style is much sensitive to underlying strategy
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Last edited by Saurabh; 04-02-2011 at 05:56 PM.
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Old 04-02-2011, 09:24 PM
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Originally Posted by Saurabh View Post
If you're trading positional on a larger time frame- 2-6 months, this may work well. Hopefully I've understood it correctly and you mean something like accumulation or continuity trades.

From my experience, adding on the way up does not helps unless a certain event occurs- say a particular price pattern on which you can raise your stop as well.

PS: a particular trade management style is much sensitive to underlying strategy

Precisely Saurabh I was about to add 'you can call it accumulation rather than scaling-in startegy' to my previous post when i saw yours (you even added greater clarity with the continuity bit)

It has also saved me from losses when the trade went wrong (prices fell more than initially expected) Two recent examples are IDBI & MOIL (and it wasn't precise martingales either) Off course there are obvious dangers to this (essentially) averaging down thingy. (A mental stop, if prices fall below which i'll get out on the bounce - is all i have employed thus far).
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Old 04-02-2011, 09:26 PM
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What is more important Position or Size


:laughs:

Note :
Special spam after long time..Please forgive and bear with me..
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Old 19-02-2011, 12:36 PM
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TradersCALM - risk of ruin menu

Hope its something about position sizing.
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Old 15-03-2012, 01:13 PM
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its helpful
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Old 18-09-2012, 09:36 AM
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Hi all,

How much of your trading capital would you allocate for a particular trade?
Please explain with reasons,logic and calculations if necessary.. (intraday traders only )
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Last edited by rocky; 18-09-2012 at 09:48 AM.
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Old 18-09-2012, 11:39 AM
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Lets look at a hypothetical trading instrument that:
1.Gives rise to the expected trend,as per analysis, 40% of the time.
2.Gives rise to opposite/reverse trend,as per analysis, 40% of the time.
3.Ends up being inside the trading range 20% of the time,and keeps on whipsawing between the support and resistance levels.

Note: I am trying to develop a strategy that can make money in case1 and 2. I am not able to find a solution for case 3...if you have, please share.


Assumptions made:

Price of 1 lot = x
Trading capital=4x (enough to trade 4 lots at a time.)


Strategy to trade:

After getting signal,enter with 1 lot.Use the other 3 lots for stopping and reversing at the support/resistance line of the TR.
Why 3 lots? If The opposite trend is developed(case 2 above),1 lot will be to stop out the position+1 lot will be to make money in the new trend, so that the loss incurrred due to stop out is nullified+1 lot to make net profit and pay the trading commissions.

Case1- Profit
Case2- Profit
Case3- Loss



Disadvantage-
Even under most favorable circumstances, you are utilizing ONLY 25% of your capital.

Advantage- We make money on 80 % of the trades.

Please point out the pitfalls in this strategy.
Also please suggest ways to improve this strategy.

Additional suggestions are welcomed.
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Last edited by rocky; 18-09-2012 at 11:50 AM.
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Old 18-09-2012, 01:32 PM
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Originally Posted by rocky9281 View Post
Hi all,

How much of your trading capital would you allocate for a particular trade?
Please explain with reasons,logic and calculations if necessary.. (intraday traders only )

With or without leverage?
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Old 18-09-2012, 02:31 PM
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How much capital for a particular trade?
It depends on many variables like account size,volatility, nature of instrument (stock in cash segment or derivatives ), amount of risk, system performance parameters, risk of ruin.There are good articles around here on money management , have a look around.
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Old 18-09-2012, 02:42 PM
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Originally Posted by rocky9281 View Post
Lets look at a hypothetical trading instrument that:
1.Gives rise to the expected trend,as per analysis, 40% of the time.
2.Gives rise to opposite/reverse trend,as per analysis, 40% of the time.
3.Ends up being inside the trading range 20% of the time,and keeps on whipsawing between the support and resistance levels.

Note: I am trying to develop a strategy that can make money in case1 and 2. I am not able to find a solution for case 3...if you have, please share.


Assumptions made:

Price of 1 lot = x
Trading capital=4x (enough to trade 4 lots at a time.)


Strategy to trade:

After getting signal,enter with 1 lot.Use the other 3 lots for stopping and reversing at the support/resistance line of the TR.
Why 3 lots? If The opposite trend is developed(case 2 above),1 lot will be to stop out the position+1 lot will be to make money in the new trend, so that the loss incurrred due to stop out is nullified+1 lot to make net profit and pay the trading commissions.

Case1- Profit
Case2- Profit
Case3- Loss



Disadvantage-
Even under most favorable circumstances, you are utilizing ONLY 25% of your capital.

Advantage- We make money on 80 % of the trades.

Please point out the pitfalls in this strategy.
Also please suggest ways to improve this strategy.

Additional suggestions are welcomed.

Have you tried to backtest this strategy with historical data??

What happens when you are whipsawed 2-3 times in a row??

Your money management strategy is similar to a martingale strategy.

-- no1lives4ever
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