Friday, 25 November 2011

Money Management

I was re-reading a couple of my books on money management. There are three that I could suggest as a starting point:
The Ryan Jones book, one of the Ralph Vince books, and, of course, Vam Tharp's books.

Many of the above are available on Kindle and would make a worthwhile week-end read.

Good money management improves how much you make with your trading system/methodology. It's as simple as that. It's all about position sizing. When to increase and when to decrease. In any one day, the risk per trade for me is the same, whether I'm trading a 25% position or a 100% position. However, how you manage your trading size as your account size grows will have a huge impact on your annual profitability. Naturally, that assumes CP.

One take away from Ryan Jones' book is that people start to use money management too late. They often want to get some profits under their belt before they implement a money management strategy. Jones says "do it now". A proper money management strategy makes such a difference that even a 3 month delay will cost.

No trades for me today. Back to charts on Monday.

Good Weekend.


  1. jenrique42

    I'm very happy today because I have been able to see this change in trend from bullish to bearish, with the system electroniclocal
    I hope this is the principle of good management system, and the first of many results and that is the result of hard work


    hoy estoy muy contento, porque he sido capaz de ver este cambio de tendencia, de alcista a bajista, con el sistema de electroniclocal
    espero que esto sea el principio del buen manejo del sistema, y el primero de muchos resultados y que sea resultado del trabajo duro

  2. of all the books you listed, what do you suggest to learn more about Scaling In strategies?


  3. Good stuff jenrique. I know you have been working for over a year as I remember your previous posts. It looks like it's coming together for you. Terrific!
    Anon 01:00, I only scale in if price goes against me and the trade picture is still valid and I am inside my drop dead stop. No one writes about that. Scaling in at a worst price is, IMO, only good if you are a longer term trader than I am as you are taking on more risk and less profit than the previous entry.