Proper use of buying power

Discussion in 'Strategy Development' started by CasperCRF, Oct 5, 2005.

  1. I was wondering if anyone has some good guidelines for proper use of buying power using 4:1 margin. I read in the Turtle Traders rules that they used 80% of their buying power. So if they had 100k in BP they would use 80k. If their buying power dropped to 80k then they would drop the BP to 60k(another 20% of the original 100k) and the opposite if their BP increased. I was using this as a guide until I was told to use 50% of your BP when starting out. Anyway I was just wondering what other people use as a guideline?
  2. Really depends on many things including volatility of instruments traded, correlation among them, your tolerance for risk, how similar positions have tested in the past, etc, etc.