Stop-loss calculation of leveraged positions GDX Robot

[Rembert]

I do the same, not only for robot but also my disc trades.

R is indeed an excellent measure for the quality of a trade. It doesn't mean very much if one says I made x amount of $ or % on a trade. Risking $1000 to make $100 is an example of a bad trade even if it made a profit.

[ilonaross]

I think Van Tharp's analysis of position sizing is the best treatment that I've seen anywhere in the investment/trading world. I generally follow his methodology with the GDX and IWM trades.

So let me give an example of my latest GDX trade:

One of my accounts is $47,734 in size.
2% of this is $955 -- my maximum risk per position for this account.
GDX entry for me was at $47.11 -- I bought about 5 minutes before the open using a limit order.
The recommended Stop Loss for GDX was -6.38%, which is $44.10
$955 / 0.0638 = $14,968 position size
$14,968 / $47.11 = 317 shares

The position is up $375 as I write, or in Van Tharp's parlance, 375/955 -->.39"R", which is his method of quantifying amount risked to amount won.

Hopefully this helps.

Regards,

pgd

Thank you so much for posting such a clear example. This is the first time I've seen an immediately usable, sensible formula, and I didn't have to wade through reams of blah blah blah to get to the point. I'm incorporating this as of today.

Thanks!!!