StockFetcher Forums · General Discussion · Never Go "All In" By Charles Delvalle<< 1 2 >>Post Follow-up
TheRumpledOne
6,411 posts
msg #48488
Ignore TheRumpledOne
12/9/2006 12:01:01 PM

Never Go "All In"

By Charles Delvalle

I see this mistake all the time: A new trader wants to make big money on a "hot" stock, so he lays down a position that is too large. But all it takes is one mistake... and he can lose most of his trading capital.

Let's say you start with $10,000 in your account, and you put all of your trading capital into each of a series of four trades:

You make 20 percent in your first trade, so now you have $12,000.
You make 30 percent on your second trade, so now you have $15,600.
You make another 20 percent on your third trade, so now you're up to a whopping $18,720.
But then, on your fourth trade, you take a big loss. The company you've invested in reports a lawsuit, and the stock tanks 80 percent. Now you're down to $3,744 - $6,256 less than the $10,000 you started with.
My advice to a new trader who doesn't have a lot of start-up capital is to never put more than 20 percent of his trading capital on any one position - no matter how "hot" the stock seems to be. Let me show you how that would work in the example above:

On your first trade, you would make $400.
On your second trade you would make $624.
On your third trade, you would make $440.
And on that fourth - disastrous - trade, you would lose $1,834.
But you would still have $9,630 in your account, instead of a measly $3,744. In other words, by using no more than 20 percent of your trading capital on each position, you could still take a big loss and have the money to trade another day.

This asset allocation works differently if you are an investor with over $100,000. At that point, you should dedicate no more than 4-5 percent to any single trade.



juha
52 posts
msg #48501
Ignore juha
12/9/2006 7:39:57 PM

it's correct, but, TRO, you likes to repeat "it's not what you do, it's how you do it". I'm monitoring pre-market every day waiting for some special situation which occures one time per 4-6 months to invest ALL my money in one stock, may be even with margin....


markcrisp
187 posts
msg #48508
Ignore markcrisp
12/10/2006 8:17:30 AM

oh and please do tell us when you have such a guarantee......Never seen one yet. Unless oyu have insider info.? I am all ears.


juha
52 posts
msg #48514
Ignore juha
12/10/2006 2:44:05 PM

markcrisp, give me your email, I'll drop a message for you when I will put most of my money into one stock for several hours, I can even send a screenshot of my trading platform to ensure you that I'm honest...


TheRumpledOne
6,411 posts
msg #48516
Ignore TheRumpledOne
12/10/2006 2:56:20 PM

I want to see it too!

therumpledone at gmail dot com

Thanks




markcrisp
187 posts
msg #48542
Ignore markcrisp
12/11/2006 1:44:03 AM

hang on...so you look for one day trade every six months? This cannot be right? I thought you was looknig for a TASR, HANS stock (400%+ move) not a day trade....

So have I got this wrong?




juha
52 posts
msg #48543
Ignore juha
12/11/2006 7:56:47 AM

>hang on...so you look for one day trade every six months? This cannot be >right? I thought you was looknig for a TASR, HANS stock (400%+ move) not a day >trade....
>So have I got this wrong?

I have several strategies, so this one I'm talking about is really happens one time per 4-6 months... and it's a day trade, 2-3 hours holding period...


markcrisp
187 posts
msg #48544
Ignore markcrisp
12/11/2006 8:54:58 AM

OK....let us know about one BEFORE it happens. (no good after. LOL)

ICE is going up short term (11th Decmber 2006)


juha
52 posts
msg #48546
Ignore juha
12/11/2006 8:59:16 AM

ok, I'll as soon as it happens


markcrisp
187 posts
msg #48550
Ignore markcrisp
12/11/2006 10:44:49 AM

What kind of % return do you get in these 2-3 hour trades?




StockFetcher Forums · General Discussion · Never Go "All In" By Charles Delvalle<< 1 2 >>Post Follow-up

*** Disclaimer *** StockFetcher.com does not endorse or suggest any of the securities which are returned in any of the searches or filters. They are provided purely for informational and research purposes. StockFetcher.com does not recommend particular securities. StockFetcher.com, Vestyl Software, L.L.C. and involved content providers shall not be liable for any errors or delays in the content, or for any actions taken based on the content.


Copyright 2022 - Vestyl Software L.L.C.Terms of Service | License | Questions or comments? Contact Us
EOD Data sources: DDFPlus & CSI Data Quotes delayed during active market hours. Delay times are at least 15 mins for NASDAQ, 20 mins for NYSE and Amex. Delayed intraday data provided by DDFPlus


This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.