The Successful Trader's Guide to Money Management

Proven Strategies, Applications, and Management Techniques

Andrea Unger

• Publisher: Wiley
• Year: 2021
• Print ISBN: 9781119798804
• eBook ISBN: 9781119798828
• Edition: 1
• Topic: Business
• Subtopic: Investments & Securities
• Index: Business

Discover how to maximize the effectiveness of your trading techniques by applying the right money management techniques

Money management is a central element of trading the financial markets, especially in uncertain times. Yet investors often misinterpret the central concepts of money management. To manage risk and obtain optimal rewards from your trades, you will benefit from a deeper understanding of how the professionals manage money. The Successful Trader's Guide to Money Management describes the operating methods that seasoned investors use. With this book, you'll avoid the common mistake of focusing too much on entry levels and stop-losses, and you'll learn to consider the impact of proper money management on your final portfolio results.

Successful traders focus on risk management, avoiding opening positions that are too large with respect to the total capital they have available. Packed with practical examples and with special focus on money management or position-sizing, The Successful Trader's Guide to Money Management offers a comprehensive coverage of widely practiced risk management models, examining their strengths and weaknesses. You will learn how to use the most effective operating models, including the Fixed Fractional, Fixed Ratio, and Percent Volatility models. This book also provides a thorough analysis of portfolio management models. These essential tips will nudge you toward a more winning position as you enter your next trades.

• Learn how the professionals manage money and avoid common trading mistakes
• Design a trading system that minimizes risk and maximizes reward through correct position sizing
• Understand the most important money and portfolio management models, including Fixed Ratio, Percent Volatility, Fixed Fractional, and more
• Equip yourself to trade smarter, individually or with a broker, on equity, derivatives and Forex markets

For individual and institutional investors alike, this book is a ticket to more solid trading strategy, especially in uncertain times.

CHAPTER 1
Martingale and Anti‐Martingale

1.1 The Right Stake

As mentioned in the introduction, money management (M.m) aims to establish the best stake to place when opening a trade or, in general, how much of your capital to use in the gamble you are about to embark on.

I think we all tend to adopt quite a simple statistical approach that encourages us to hope in a positive result after one or more negative results, and to fear repeating a success after placing a successful stake. In general, this is why you don't want to continue after a certain number of consecutive winning trades, while after a series of losing trades you'll be sure the next one will be a winner.

This ...

Table of contents

• Cover
• Table of Contents
• Title Page
• Copyright
• Dedication
• Foreword
• Preface
• CHAPTER 1: Martingale and Anti‐Martingale
• CHAPTER 2: The Kelly Formula
• CHAPTER 3: A Banal Trading System
• CHAPTER 4: Money Management Models
• CHAPTER 5: Refining the Techniques
• CHAPTER 6: The Monte Carlo Simulation
• CHAPTER 7: The Work Plan
• CHAPTER 8: Combining Forces
• CHAPTER 9: Money Management When Trading Stocks
• CHAPTER 10: Portfolio Management
• CHAPTER 11: Discretionary Trading
• CHAPTER 12: Questions and Answers
• APPENDIX I
• APPENDIX II
• APPENDIX III
• APPENDIX IV: Online Trading
• Index
• End User License Agreement