In his book Come intro my Trading Room, Alex Elder explains the directive of 2% and 6%?
I remember the 2% is don't risk more than 2% of your equity. And something roughly "after loosing 6% of your equity one month" stop trading and lurk until subsequent month, but I don't remember exactly. Can anybody explain this better for me?
Thank you.
Answers:
a short time ago one of plentiful traders offering counsel. influence you enjoy 20,000 you dont wasnt to risk more than $400 on any one stock/sector anything (too low for me) I perfer no more than 20% of total portfolio (though even I am breaking this rule). The 6% is a nice nouns to own a stop on. Say CWI (and ETF I own) I bought 50 shares at let say-so $42 for a total of $2100 next you clutch that and x it by 6% or $126 purpose if your total worth contained by that stock is $1974 or 6% smaller amount after you should be out classification 39.48 is the price you want to stop at. I use 5% sometimes 8% but 6% is a dutiful catalogue. It protects your losses and or your gain vote cwi go up to $50 a share after you want to come within underneath those gain and protect your gain. Keep surrounded by mind of broker fees and what not.
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Thank you.
Answers:
a short time ago one of plentiful traders offering counsel. influence you enjoy 20,000 you dont wasnt to risk more than $400 on any one stock/sector anything (too low for me) I perfer no more than 20% of total portfolio (though even I am breaking this rule). The 6% is a nice nouns to own a stop on. Say CWI (and ETF I own) I bought 50 shares at let say-so $42 for a total of $2100 next you clutch that and x it by 6% or $126 purpose if your total worth contained by that stock is $1974 or 6% smaller amount after you should be out classification 39.48 is the price you want to stop at. I use 5% sometimes 8% but 6% is a dutiful catalogue. It protects your losses and or your gain vote cwi go up to $50 a share after you want to come within underneath those gain and protect your gain. Keep surrounded by mind of broker fees and what not.