Money Management

One, if not the most important aspects of trading successfully is the ability of a trader to manage risk appropriately.  Well too often, a trader will come up with a solid trading idea and place a trade without thinking about when they will exit their trade, or how much they will risk on a trade.  Without a sound plan on how to manage your portfolio, successful trades will be the exception more than the rule.

Money management is a defensive concept. It keeps you in the game to play another day. For example, money management tells you whether you have enough new money to trade additional positions. Trade size and stop placement are two distinct concepts.   Stop placement does not address the question of how much capital should be allocated to a position.  The goal of this section will be to explain how to manage a trade and a portfolio and the different techniques that can be used to create sound risk and portfolio management.

Money Management

  • Money Mangement Trading
  • Risk and Bet Size
  • Draw Down