Everyday someone starts to trade for a living, well at least that is their plan. You know, get a computer, open an account somewhere, buy some software, join a chat room and then it's simple, just buy and at some point and later sell it back and make money.....WOW, what a country!!!!
But what should you trade....futures, bonds, forex, commodities, options or stocks it seems the list can be endless. Then comes the next question, what time frame should you trade, the daily, hourly, 15 minute, 5 minute or a tick chart...what about a volume chart....and yada yada yada.
Then you have all those indicators, oscillators, trend lines, fibonacci, gann, internals, retracements.......and yada yada.
Of all the things you have to consider out there is there is one that just about everybody forgets.....money management. It's one thing to have a style or edge and it's another when you couldn't find a leaf out in the woods. Money management is the key...PERIOD.
This is going to be the driving force behind the educational workshop that is being planned.......
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3 comments:
But you need a positive expectancy otherwise even great money management won't help. No matter how you manage your money at the slot machine, you will always lose in the long run. Isn't an edge as important? Thanks.
I'm a novice trader but have had a couple of "breakthrough" days. Those profitable days occurred when I scaled out of profitable positions. I already have a way of guessing right more than 50% of the time, and I set my initial stop such that my max risk is 1% of capital.
Basically I take profit on 1/2 of the position and then move the stop on the remainder to breakeven. I believe I've seen the same method described in this blog.
I think of this metaphorically as being constantly bothered by two demons, one on each shoulder. One is named Fear and the other is named Greed. You have to bribe both of these demons to shut them up. So I bribe Fear by taking some early profit (fear of losing money on a profitable position) and bribe Greed by letting a portion of the position ride (the desire to not miss out on a bigger move).
Steve G
Truer words have never been spoken. How often do all the "gurus" go on about some trading system with 57 proprietary indicators and yet never mention money management?
I must admit, the main thing that caught my eye on this post was the "educational" part. I have already learnt a surprising amount from this blog / site and if there's a way to learn more - where do I sign up?!?!?
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