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Strategies & Market Trends : DAYTRADING FUNDAMENTALS Real Time Stock Picks&l -- Ignore unavailable to you. Want to Upgrade?

To: David Loomis who wrote (849)	4/25/2000 12:36:00 PM
From: Eric P	Read Replies (1) \| Respond to of 871

David: It sounds as though he is recommending a stop placement at 3 times the average true range (ATR) away from the entry point. In your example, with the ATR = 2, the stop would be set at a price $6 from the entry point. Now, if the maximum stop loss is limited to no more than 2% of your trading capital, then the number of shares can easily be calculated as by the following equation: (0.02) x (Account value) = (Max shares) x (stop loss points) OR Max shares = (Account value) x (0.02) / (Stop loss points) Now, assuming a $100k account and your example with a 6 point stop then => Max shares = $100,000 x 0.02 / 6 => 333 shares of stock Note that if you lose 6 points on 333 shares of stock, your total loss will be $2000, or 2% of your $100k account. I hope this helps. -Eric