"Money Management" Posts
Defensive Money Management Explained: Better Position Sizing
By Lawrence
Traders, discretionary and mechanical alike, are often puzzled on how to properly scale their trading with respect to their trading account size. Classic rule of 1% or 2% risk of investment capital just does not work because traders are here to take risk, not trying to be conservative investors. So, what can a trader do […]
Defensive Money Management Explained: How to Evaluate a Trading Strategy (or Your Edge) Objectively
By Lawrence
One of the fundamental questions that we have to ask ourselves when we see a profitable trading strategy is that whether the strategy will reform well in the future. All kinds of testing are invented from walk-forward testing to Monte Carlo simulation for the sake of giving us an idea how good (or bad) the […]
Defensive Money Management Explained: When Your Trading Style Fails
By Lawrence
Quite a number of fund manager and pro trader friends have experienced significant drawdown so far in year 2017. Partly thanks to the uncertainties of the current geopolitical environment, these veteran professionals all have expressed their frustrations with their performance. On the other hand, their observations and responses to the current situation they are facing […]
False Sense of Security and Reality
By Lawrence
Talked to many people lately who said they are now interested in buying a safe to put in their homes. Some of them heard the news about Japanese people have bought so many safes that many places are out of stock. Some of them learned that in Europe the trouble caused by the refugees has […]
Should You Stop Trading When Your Weekly or Daily Profit Goal Is Reached?
By Lawrence
Many traders choose to stop trading once a dollar based profit goal is reached. It is a safe guard against oneself from over trading. It also helps a trader from getting to aggressive due to emotional high triggered by reaching the profit goal too quickly. So is it a good idea to do this? I […]
Adam Carroll: When Money Isn’t Real, The $10000 Experiment
By Lawrence
This is a good video that can help explaining why transition from sim trading to trading with real money takes some planning and efforts to smooth out the process. My advice – treat sim trading as seriously as you can similar to what pilots do while in training with their flight simulators. This will make […]
Jonathan Bricker: The Secret to Self Control
By Lawrence
Jonathan Bricker is a researcher on behavioural change. His work shows that discipline alone is not enough to induce changes on negative behaviours or habits. Instead, having a strategy based on acceptance and commitment allows for much better chance of success in permanent behavioural changes. For traders who have impulsive behaviour like over trading and […]
Time To Slack Off 2014 Update
By Lawrence
Last week my trading goal for the year was reached. It happened so early partly because I have a modest goal this year. The main reason, however, was the swing play for the market correction worked out nicely. At this point, it is time for me to slow down with trading and spending more time […]
Jihan Bowes-Little: Trading as a Way of Life
By Lawrence
A trader who works for GS giving a talk about being a trader. Notice the whole talk sounds right because it is playing right into what people perceive to be the right way to trade but it is actually a formula for guarantee failure if you are trading your own money. Do not get me […]
Defensive Money Management Explained: The Power Of Compound Growth
By Lawrence
Whenever I talk about trading model performance, I avoid talking about exact amount of money to be used and how that can work for you if you put all the gains from trading back into the system for compound growth. There are many reasons why it is better to focus on consistent model performance. However, […]
