|
PureBytes Links
Trading Reference Links
|
Among other observations, John commented
> "... I only lay out a possible scenario in an attempt to determine the
> risk to reward ratio and to help me decide how aggressive I should be in
> my money management. ... Proper money management accounts for 70%-80% of
> trading success I believe. ... Never trade on a prediction because
predictions
> are often wrong, but sometimes right. Only assess the potential
risk/reward."
You bring up a point that has long interested me, but about which I've found
darned little that was useful. Why is it no one (at least that I've
discovered)
ever has anything worthwhile to say about money management? (Well,
okay, beyond the usual "Don't risk more than n percent of your capital on
any
one trade," where n is a very small number.)
Yes, I do know about asset allocation, BTW, but I don't see that it applies
very well to futures trading.
To start any possible discussion, I'll offer my own best hint. I've never
found
a better way to estimate potential risks and rewards than ordinary
trendlines,
support/resistance, and 50-percent (more or less) retracement levels.
But my own understanding is that these factors have more to do with simple
trade analysis than money management. Money management is what you
do after that.
Or am I over-complicating things?
Owen Davies
|