microserf wrote:
QUOTE:
Hi bonner,
couple of questions lang which still confuses me sometimes
1. on triangles - if i see a clear triangle pattern on the chart, i assume that it should be confirmed by volume right? - diminishing volume from the base going to the apex. If this diminishing volume is absent or not clear, is it still a triangle or it looks like a triangle but will not behave like one?
2. position sizing - I did not quite get this lesson the last time. how do we determine the position size after we identified it as a potential trade. after identifying TP, SP and determining the risk reward. I remember that we say max exposure of any one trade is up to 2% only of the total account value. So for example I got a P100,000 account. 2% means P2000 - is this P2000 the amount i can use to trade one contract or is that the total risk -meaning the 2k is the max amount i can loose before i cut my loses?
pls advice
thanks again
1. on triangles - if you see a triangle and nalabuan ka sa volume, question it. besides, you may probably see some other stocks with similar patterns that may be better.
2. position sizing - what Danny & I showed is that if you have a pie, you may divide this to any number of slice you like but what we are suggesting is that the optimal number of slices that you can divide your pie into is 4 stocks. So if you had 100,000, that means the most that you should devote to one stock is 25,000.00, no more. Anytime you decide to tinker around with this, you change the permutation of your pie slice. Okay ka kung kumita, what if it went the other way around? Can you imagine if you devoted 100% to one stock only? If it earned you 35% in one shot then good! What if it took away 30% of your fund in one hit?
