Building up new positions
You can use the position calculator to determine the size of new positions. The scope for establishing new positions or expanding existing positions is determined by the overall risk less the risks of the positions already entered into. The main restriction for an investment is therefore not only the availability of liquid funds, but above all the risk limit.
The risk positions should have a roughly equal risk share (default setting is 1%). For example, if you set the risk share per position at 1%, you can build up around 10 positions with a total risk of 10%. The position size is then determined by the risk of the position and the width of the limit entered.
To determine the size of a new position, enter a security, its price (displayed when selected) and a stop limit in the position calculator. The risk divided by the difference between the price and the stop then provides the desired position size.
Proceed as follows:
- Open the money management tool for the desired portfolio. (See the section Opening the money management tool.)
The positions of all securities accounts in the portfolio or of the holder are displayed in the asset overview. - Make the desired settings for money management. You can find information on this in the section General settings in money management.
The display of the capital overview is updated based on your entries. - In the position calculator, select the security you wish to purchase in the "New security position" field. The course is displayed in the "Course" field.
- Enter a stop limit in the "Stop" field.
The position calculator calculates how many units of this security you can purchase without exceeding the calculated risk per position. The number of units and the total price of the new item are displayed in the white output field of the item calculator. - You can now enter the transaction as usual. Information on this can be found in the section Enter transactions.
The position calculator displays a number of key figures that make it easier for you to specify a stop limit. Information on this can be found below in the "Key figures" table.
Outputs of the position calculator
| Element | Description | |
|---|---|---|
Quantity | The size of the new position. | |
Investment | The amount for the new position. | |
Messages from the position computer
| Element | Description |
|---|---|
Risk limit exceeded (portfolio) | The sum of the current risks exceeds the maximum total risk. |
Risk limit exceeded | The sum of the current risks together with the risk of the new position exceeds the maximum total risk. |
Liquidity exhausted | There is not enough liquidity to build up the new position. |
Investment limit exceeded | The level of investment is exceeded. |
Key figures
The position calculator also displays some key figures that make it easier for you to specify a stop limit.
| Element | Description | |
|---|---|---|
Maximum drawdown | The maximum loss from the period high that the security has incurred in the last 50 or 250 trading days. | |
Maximum increase | The maximum profit from the period low that the security has made in the last 50 or 250 trading days. | |
Volatility | The volatility of the security. | |