Comment on Live Example -1

Nikil commented on 26 May 2018, 01:37 PM

hey Karthik,
I understood the beta neutrality part of position size. My question is, let me take an example from above. lets say 1 lot of tata motors is equal to 1 lot of tata motors DVR. In this case if I want to trade 2 lots of each of the script then how do I know if it is safe for me to position 2 lots assuming I have funds to take the position. That’s why I wanted to know if their is any way if we could know the amount of loss we would suffer in case the SL hits. Assuming I am willing to risk 5% of my account in one trade. If trading 1 lot of both has a SL at 2.5% then I can probably do 2 lots right? Is there any rough approximation of finding out the loss. I am not worried about winning because we are entering at 2SD level. And from the trade you mentioned above, you have entered the trade of tata and tata dvr on 14th and profit was taken on 23rd. Assume you have not got the profit signal and the trade is open, there was a quaterly result announcement on 24th, what do you recommend us to do? Should we close the trade or keep it open if there is any situation like this?
Thank you.

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