Other than an arbtrary % cash or using the "Idiot Wave" I like your idea to use a stocks own range to decide what % to leave in cash for the innitial investment. But it does not take the current price in relation to the high and low into account. I think Lostcowboy was on the right track. Below I modified your formular. It probally is not the best way but it is what I came up with. You may want to set some maximum and minimum amount of cash (30%-70%? or 20%-80%?).If a stock falls outside that range maybe you might even want to wait for it to drop in price or if it is at the low end wait to see if it keeps sinking (Cisco at $20 still fell to $10). Just some thoughts.
OK Here is what I came up with(using 52week high and low I guess)for an innitial investment.
(High - Low)/ High x (Current Price /High) x 100 = % Cash
If a stocks range is 100 to 20 and is presently 90 the % cash will be 72%. If the current price is 30 the % cash would be 24%. Of course if the stock then goes down to 10 you will run out of cash.
I tried to "reduce" the formular further (thinking some of the Highs in the formular would cancel out) but gave up.
Toofuzzy
Take the road less traveled. It will make all the difference.
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