How to allocate capital between a nuber of stocks?

Dipesh1989 · Sep 5, 2011

Hello everyone , I was just wondering are there any formula or methods you would know in how to allocate your capital when you have a fixed amount of capital and you want to purchase some stocks, say for instance 15 different stocks. I know this is a trading site and im talking more on investing but any help would be really helpful.

eegozi · Sep 5, 2011

Dipesh1989 said:
Hello everyone , I was just wondering are there any formula or methods you would know in how to allocate your capital when you have a fixed amount of capital and you want to purchase some stocks, say for instance 15 different stocks. I know this is a trading site and im talking more on investing but any help would be really helpful.

(Risk you are willing to accept per trade)/(distance to your stop loss price) = # shares you can buy.

If this does not make sense look up Dr. Van Tharps "Supertrader" book and read a bit about money management (ie position sizing) ...

Good Luck

Masquerade · Sep 5, 2011

You want to allocate less capital to the high risk high reward stocks. More capital to the lower yielding lower risk stocks and make sure you're not over-exposed (unless you intend to be) to a sector.

How to allocate capital between a nuber of stocks?

Dipesh1989

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eegozi

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Masquerade

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