Replies to post #29425 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Hi Jim.

From what you've previously said it looks like you're reasonably content with employing leverage (3X I think you said). We each have our own investment risk/target objectives, you might however like to consider a more conservative approach.

I've uploaded a worked example over at

http://www.jfholdings.pwp.blueyonder.co.uk/Dow_p_step_test.htm

that shows how you might employ leverage in a somewhat conservative manner.

In many respects its a bit like using 1X until all the cash is exhausted and then saying OK, I've run out of cash, so I'll switch to using 2X at these low levels in order to kick start out of being all-in and missing volatility capture benefits. Except that by including leverage from the offset you also get an additional volatility capture uplift across the whole price range.

Best. Clive.