How to allocate capital between a nuber of stocks?

[Dipesh1989]

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]

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]

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.