Hi Pat, I joined yesterday and I am very excited to learn a correct way of making money. I have been trading since 2017. Not loosing much and not winning much. Stil around my breakeven point. My previous education was just not that perfect. I bought O'Neils book and found you via your recent interview with Rochard Moglen.
I have a question regarding risk and position sizing. In O'Neil's book and here everyone talks about percentages when it comes to risk, positionsizing, stop-loss position. I learned somewhere else that it is worth using ATR of the stock instead.
The reason is this: Different stocks move different % per day on average. Some move about 4-10% per day and others <2% on average. So when placing the stop loss at 7% max. as recommended in CANSLIM it depends on the stock itself how far the stop is away from price action. On stocks with high % move it is very tight and on other further away. When using a fixed distance measured in ATR (i.e. ATR(10) * 2 below the entry) and calculating the position sized based on this distance, every stock becomes comparable in terms of size and risk.
My questions are: Do you know about this concept? Is it not as good as I might think?