In the twenty-first century it has become fashionable to manage one’s own investments, yet few traders implement disciplined, professional money management strategies. During the stock market bubble, limiting risk was an afterthought, but given the recent price action, it’s time to get serious about management of money and risk. Professional risk and money management strategiesare the foundation for success. Essentially, money management tells you how many shares or contracts to trade at a given point.
Money management optimizes capital usage. Few have the ability to view their portfolios as a whole. Even fewer traders and investors make the move from a defensive or reactive view of risk, in which they measure risk to avoid losses, to an offensive or proactive posture in which risks are actively managed for a more efficient use of capital. Trend following risk management formulas and philosophies are key to increasing profits while controlling risk.
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. Don’t confuse money management with stop placement. Stop placement does not address the how much question.
Money management is risk management. Risk management is the difference between success or failure in trading. Trading correctly is 90% money and portfolio management. Unfortunately, this is a fact that most people want to avoid or don’t understand. Once you have your money management under control, your discipline and psychology is 100% of your success.
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Money management optimizes capital usage. Few have the ability to view their portfolios as a whole. Even fewer traders and investors make the move from a defensive or reactive view of risk, in which they measure risk to avoid losses, to an offensive or proactive posture in which risks are actively managed for a more efficient use of capital. Trend following risk management formulas and philosophies are key to increasing profits while controlling risk.
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. Don’t confuse money management with stop placement. Stop placement does not address the how much question.
Money management is risk management. Risk management is the difference between success or failure in trading. Trading correctly is 90% money and portfolio management. Unfortunately, this is a fact that most people want to avoid or don’t understand. Once you have your money management under control, your discipline and psychology is 100% of your success.
Read More.....
