Wednesday, April 26, 2006

40 - Trading Methodology By Larry Jacobs

An extract of an article from Traders World Magazine issue #40

Trading Methodology

By Larry Jacobs

Newport Coast Capital Methodology uses a Stage One trend following and money management system with additional filtering rules to select and manage entries and exits. They use behavioral price patterns and explore the relationship between short term and long term fundamental direction, investor psychology, price trends, price behavior and the balance of supply and demand. Clients in the Newport Coast Capital community invest in accordance with the following guidelines:

Diversification - Their approach is to trade a balanced portfolio of a basket of more than 30 instruments and to diversify into multiple sectors like financials, energies, currencies, grains, indices, meats, metals, softs, etc.

Recommended Trading Capital - The minimum trading capital per account is $15,000, and they recommend a trading capital of $50,000. The subscriber may trade more capital by having multiple accounts; each account will be trading multiple instruments being allotted up to one contract per instrument. The money management guidelines will only allow the open of new positions if the current open positions, in conjunction with the new position, do not exceed 50% of the net asset value at the time the trade is being placed. Their approach is to trade a basket of instruments and to diversify into multiple sectors to create a balanced portfolio to control and manage risk, this also gives the subscriber a reasonable staying power to withstand realized or unrealized drawdown when it occurs.

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