Top Forex PairsForex is the largest market in the world and trades around the clock. Which currency pair is trending the strongest RIGHT NOW? Find out what pair is topping our list and where is it going, view this list for free now! Todays Top Performing Forex Pairs
|
Stock Market Trading
Money
Management
|
Testimonials
Great
site Kenny.
Technical
Analysis written in a straightforward way so that everyone understands.
There's
only a small few who get it consistantly correct and you are certainly
in
that group.
Chris
|
Thanks
for putting this all together and sharing! BHW
|
Awesome
Stuff! Kenny has shown time and time again the ability to show us direction in
these markets. Khalsa
|
Kenny, I appreciate your insight and analysis. You make sense of what I can rarely see.
Thanks for sharing. Gene
|
Took a gold short at 1240
just closed at 1203 :-)))))))))))))))))) ........ top call!! Gekko |
|
|
Trading
Money Management Systems
Learn
Stock Market Trading Money
Management
Trading Money Management Systems
A
stock market Trading
Money Management System - What is it,
how do we do it, what is it for and does
it work?
However
large or small a traders portfolio, the principles are the
same...
Successful
stock market traders can consistently make money even if their win-lose
ratio is no more than that 50% that can be achieved through the
flipping of a coin as a trading strategy, simply by trading with money
management and ensuring that their
gains are significantly higher than their losses.
By contrast, a trader can have a significantly higher win to lose ratio
and still lose money overall. If the losses incurred are not limited
and kept to a minimum, gains made from many trades can be completely
eroded on one bad trade. Weeks or perhaps months worth of hard earned
profits can simply disappear in a very short period of time if losses
are allowed get out of control.
What is Trading and Investment
Money Management
A Trading Money
Management system is an often overlooked part of a stock market trading
strategy. The vast majority of traders focus entirely on their
potential profit from a trade and tend to overlook the risks from
potential losses
that could be incurred from that trade if it goes against them.
A successful trader will always consider the potential losses in
conjunction with potential gains before entering any trade. In contrast
to the majority of traders, they will always place greater emphasis on
their potential loss than they do on what they may stand to gain.
Small
Losses + Big Wins =
Successful
Trading
Ensuring that losses are kept to a minimum is an essential part of this
simple, but effective equation.
In
order to become consistently successful,
it is essential for traders to develop their own stock market Trading
Money Management
System that they are comfortable with, and suits their individual style
of trading. A day trader will be able to tolerate a much smaller
potential loss on each trade, than a position trader who is investing
for the long term.
Free Excel Trading and Investment
Money
Management Worksheet with Trading Position Size Calculator
Learn
Successful Trading and Investment Money Management Systems with our
free excel
worksheet.
The easy to use worksheet
is for planning trading position size in stock
market trading and investment strategies with Stocks and Shares, Forex,
Commodities and Futures,
Options and CFDs and
will help anyone to learn
about trade position sizing in Money
Management strategies.
Traders
Day
Trading Money Management Worksheet
|
Trading Money Management System -
Tolerance of Risk
Every
one of us has our own individual levels of tolerance to risk before it
starts to affect our sense of good judgment so it is important to find
the level at which we are comfortable with as individuals. There are
two factors in this part of the equation, losses in monetary terms, and
losses in terms of points and how wide our stop loss levels should be.
For
a market with an average daily range of say 13 points, one day trader
may see 1-2 points as an acceptable risk whereas another trader may
find that their trading strategies may return a high proportion of
wins,
but generally incur a wider draw down before the trade moves into
profit.
In this case it is imperative that the trader maintains the balance of
the equation by adjusting trade position size to accommodate the wider
stop loss levels to ensure that the potential loss remains in
proportion. This smaller trading position size will of course reduce
the
potential gains form the trade but no trader will ever go bust by
making
a profit! It then becomes a discussion about the varying degrees
of success, rather than the immediate problem of consistently losing
money.
Successful Day Trading Money
Management
There does
come a point when the margin of error becomes so wide that a trade
must be considered as a slightly longer swing or a position trade
rather than a short term day trade.
In our example of a market with an average daily range of 13 points,
for a day trader who may be looking for a short term move of only 3-5
points intraday, simple arithmetic confirms that risking perhaps 10 points or more on a
single trade,
means the trader
then needs to have a trading strategy that has a win-lose ratio of up
to 3-1 just to break even
over any period of time.
This in turn, severely limits the degree of success that this trader is
ever likely to achieve, as the maximum potential is obviously a
completely unrealistic 100%. They would then need at least a 66% win
ratio
just to break even so it would not leave much potential for achieving
any
significant profit.
Successful Stock Market Trading
Money Management Systems
In addition to employing a Trading
Money Management system for individual trades, in stock market trading
it is important to have a wider Money Management system for controlling
the overall effects of those trades on the bigger picture. Their system
should help traders answer specific questions like these, in order to
help them develop their successful stock market Trading Money
Management
strategies that suits them individually...
- What time frame is
my tolerance of risk best suited to?
- Is
it wise to be fully invested at any period of time?
- What
is the maximum position size that I am comfortable with?
- How
many consecutive losses is acceptable?
- What
is the maximum consecutive monetary loss that is acceptable?
Learn more about trading position
size calculations for
trading and investment money management
systems.
|
|
|
|
