what stocks do you focus on, page-9

I recently read Trading the Trade - Robert Deel.

i wrote some notes on it cause I found it useful.

This will help with decisions around How much capital to allocation to your fav stocks?

First working out ur DDRL is important. If you can score over 2.4 then its prob ok to use up all ur capital and even borrow to invest.

DDRL = WINS / LOSSES X ( total average $ gain / total average $ loss ) X ( Gains / Losses )

scores 0 to 1 = 0 margin, scores 1.2 to 1.4 = 20 -30% margin , 1.5 to 2 = 33 - 45% margin of buying power , 2.4 to 4 = total available margin buying power, options and futures.

This other section is a good to way to decide how much capital should you be putting on shares given economic conditions.

ALLOCATION PERCENTAGE SCORE

DDRL SCORE low =-8 moderate = +4 high=+8
interest rates low =+8 moderate = +5 high=-8
Safe return Higher=-4 moderate = +2 Lower=+4
Major market Trends Up = +6 Flat = -3 down = +6
Investment vehicle Trends Up=+6 Flat=-3 Down=+6
Inflation Low=+5 Moderate= +2 High = -5
Spot oil prices Higher=-5 Moderate=+2 Lower = +5

( highest possible score 42 ) = 100% of total available capital can be used for trading or investing.
Lowest possible score -36) = 0% of total available capital can be used for trading or investing.

Allocation % score DRL Point Score
1. 36-42 = 90% - 100% 1. Below +1 = -8 pts
2. 26-35 = 70-80% 2. +1 to 1.4 = 2 pts
3. 20-25 =50-60% 3. +1.5 to +2 = 4 pts
4 11-19= 40-45% 4. +2.1 to 4 = 8 pts

Allocate on each trade should be based on the probabilities and profits potential of each. eg 22.5k total 8.5K highest prob,8.5K second,5.5K to third highest probability.

I personally havent been that disciplined to utilise this technique yet. I feel its important to disclose that.