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Greg,
I have a lot of experience with Ralph Vince's methods and use them
personally. I own all three books.
The first book, Portfolio Management Formulas, is a good basic outline of
his money management theories. This is the place I would start if I was a
new trader or someone not extremely adept at statistics. It will give you a
good feeling for whether or not you want to carry on further with his
ideas.
The second book, The Mathematics of Money Management, includes a summary of
the first book and then extends the theory somewhat. If you were somewhat
knowledgeable about statistics and an experienced trader then you could
start with the second book and skip the first one. Otherwise, I would go in
order.
The final book, The New Money Management, attempts to show how Ralph's
theories can be applied to areas other than trading as well as to trading
systems that are not 100% mechanical. It is also the most advanced as far
as the level of statistics required to get something meaningful out of it.
I found it the least useful since I do trade 100% mechanical
(back-testable) systems but it could be more relevant to others. He does,
however, include a few more tips of using his theories that he developed
since the first two books. In the end, if you were actually going to use
his theories to trade then I would get all three books.
Ralph's theories are relevant no matter what or how you trade. His basic
premise is that there is an optimal amount of your account (actually a
fraction of your largest loss) to bet on each trade. This amount can be
calculated and statistically proven. Even if you choose not to use the
optimal amount (which you may not because of the high drawdowns) every
trader is trading at some fraction (or multiple) of this optimal amount and
it will be useful to know what the optimal is so you can understand what
*not* trading at the optimal means.
I highly recommend his work and it has been successful for me. Any trader
who has not read at least the first book is in for an eye-opening
experience. Start with the first book and see what you think from there.
Blaine Mathieu
Turning Point Trading Inc.
P.S. - I would place "entries" at about 15% of the problem.
----------
> From: GJBKDUNN@xxxxxxx
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Money Management Books
> Date: Sunday, June 29, 1997 2:22 PM
>
>
> As I mentioned a few weeks ago I am quite comfortable with my entry
> strategies and have come to the conclusion that entry strategies get 95%
of
> the focus but is probably only 33% of the problem. The other 66% being
exit
> strategies and Money Management. On that note I was scanning some of
book
> catalogs and came upon the following books:
> The Mathematics of Money Management" by Ralph Vince
> Portfolio Management Formulas" by Ralph Vince
> The New Money Management: A Framework for Assett Allocation" by (you
guessed
> it ) Ralph Vince
> Has anyone read these books and can you give me a book review????
> I'm a position trader in stocks.
>
> Thanks
> Greg Dunn
>
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