Note: The Use Of "Bang For Buck" is spoken about in Chris Tate's Book "The Art of Trading" and this is where I originally came across the formula. It says in the book that it originally came from Nick Radge, of Reef Capital and author of "Every Day Traders". Chris Tate's book is reviewed in the Book Review Section of our site and Nick Radge's book will be reviewed as soon as I read it!

I take a quote from Chris Tates book to explain the use of the bang for buck, as it is not really an indicator as such. The quote is apparently from Nick Radge who introduced the concept.

"This is not a trading system or stock-picking method. It's a selection filter to use when faced with multiple buy signals and not enough capital to fund them all." (Tate,C. 2001,The Art of Trading: a complete guide to trading the Australian markets, Wrightbooks, Milton)