Wednesday, December 12, 2007

CALCULATING THE PROTECTIVE STOPS


You can calculate your risk in the trade. In our case it is (142-132=) 10 euro. If you divide this by your acceptable risk level let say 2% of the capital which is 200€, you can find the number of stocks that you are allowed to buy. I used the google calculator to make this simple calculation. As you can see we are allowed to by 20 stocks for this trade.

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