Like Lundy said, it must be due to chaos theory of course....
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crash
- Thread starter hedgez
- Start date
Originally posted by gwb-trading
Please explain again, why do you prefer earning 8% instead of 15%? I think I'm missing your point here. [/B][/QUOTE
Most Traders perform trades with a set number of shares rather
than a fixed sum of money. If a trader opens a position with
1K shares then the following results would be achieved:
1K of stock priced at $60 moves $5 (8%) yields $5,000
1K of stock priced at $15 moves $2 (15%) yields $2,000
____________________________________________________
Ah, gwb, I did not know this. Thanks for the clarification.
Lavish, this does not negate your logic. I will usually trade 10 times more shares of an $8 stock than I will of an $80 stock. What you said does make sense! But it is true that most (prop and firm) traders do not use this kind of money management. They will just trade a set number of shares. Doesn't make it right.Originally posted by Lavish
[
Ah, gwb, I did not know this. Thanks for the clarification.
Originally posted by gwb-trading
Most Traders perform trades with a set number of shares rather
than a fixed sum of money. If a trader opens a position with
1K shares then the following results would be achieved:
1K of stock priced at $60 moves $5 (8%) yields $5,000
1K of stock priced at $15 moves $2 (15%) yields $2,000
- Greg
I still don't get this idea of "number of shares". If you usually trade 1K of a $60 stock, then what's wrong with increasing size to 4K if trading a $15 stock?
Originally posted by rs7
Lavish, this does not negate your logic. I will usually trade 10 times more shares of an $8 stock than I will of an $80 stock. What you said does make sense! But it is true that most (prop and firm) traders do not use this kind of money management. They will just trade a set number of shares. Doesn't make it right.
You miss my point. Given traders of equal skill trading stocks of equal volume and percent volatility, risking the same dollar amount, the person trading the higher priced stock will enjoy the greater dollar profit.
Originally posted by daniel_m
You miss my point. Given traders of equal skill trading stocks of equal volume and percent volatility, risking the same dollar amount, the person trading the higher priced stock will enjoy the greater dollar profit.
Daniel, when you said "risking the same dollar amount", do you mean risking a dollar amount on the stock price, or dollar amount on the position?
Originally posted by skynet
means bigger risk........a half point move on 4k measn 2000 gain or loss.....for that to happen in a 60 dollar stock at 1000 shares it has to move 2 dollars......and if you loossing its easiear to get stopped out at 50 cents than two dollars
Why is it easier to get stopped out "at 50 cents" on a $15 stock than it is using a $2 stop loss on a $60 stock?