How to Download Guide To Monetary Awareness In Trading: MONEY MANAGEMENT DOC

M.O.N.E.Y.M.A.N.A.G.E.M.E.N.T.In a chapter entitled "The Secrets of Successful Trading" in Street Smarts,Fernando Diaz concluded:"Successful traders have a larger edge and better money management thanunsuccessful traders. Unlike popularbelief however, this study shows that the smaller edge of successful traders isnot the cause of their failure.Traders' failures can be explained almost exclusively by their poor moneymanagement practices."When trading stocks or commodities the importance of Money Management isunderestimated by a lot of traders. It is of much more importance than entryand exit decisions (=timing decisions) will ever be.Very few indicators are better than a coin toss, and if they are, the edge iseaten up by slippage and commission.Money Management is also sometimes called asset allocation, position sizing,portfolio heat, portfolio allocation, cash flow management, trade management,capital management, position management, size management, bet sizeselection, lot size selection, or even risk control, equity control, and damagecontrol.Money Management is managing the position size while Risk Management isabout managing losses and open profits (unrealized trading returns).Actually I don't like the term 'Money Management' as it also has a very generalmeaning (it's also used describing the "process" of saving, these "learnvaluable skills" pages, talking about piggy banks and how to teach kids aboutpaycheques).But 'Money Management' tells a trader that (s-)he should concentrate hisresearch on how to optimize capital usage and to view his/her portfolio(-)s as awhole.Actually there are (at least) 2 steps to implement proper Money Management:1) Bet sizing is the determination of what (fixed or non-fixed) fraction of aportfolio's total (or again fixed or non-fixed fraction) equity to risk on eachtrade expressed in Dollar-, Euro-, Yen-, or Swiss Franc-denominated currencyvalues.2) Position sizing, on the other hand, is the calculation of how many contracts Ishould hold in my position, once a trade entry is signaled which basically is afunction of the BigPointValue (the number of dollars that a 1-point price moverepresents) and a rounding algorithm as the number of contracts/stocks can't be traded in fractions and must be cut down to a whole integer.On my desk there are 5 statistics related books and just 2 on trading. Soaccording to the books next to me my focus on statistics is at least 70% :-). Asound knowledge of statistics is a good start into the Money Managementarena.Here a 10 Money Management lessons, including strategies, hints & tips, sourcecode, etc.They are copied together indiscriminately from several sources from theInternet, from Trading Software, and Trading Literature.These lessons won't automatically build wealth, but will bring a wealth ofexperience and knowledge, which will prove invaluable to you if bothunderstood and applied properly. It will steer the course for your success in theglobal financial marketplace.I hope you will find and pick what your trading system is desperately lookingfor.If you are too lazy to dig deep to both find and understand these lessons Iwould advise to either refrain from trading or if you are really willing to learnnothing else, then learn this:Be bright, give up being right, and emphaSIZE on Position SIZE !!!