Money management may very well be the most important piece of the trading puzzle. In
A Trader's Money Management System, expert Bennett McDowell provides time-tested techniques that can turn a losing trader into a winning one?and take the winning trader to an entirely new level. In revealing his personal approach to staying out of trouble in the financial markets and maximizing profits, he offers comprehensive insights into:
The psychology of risk control as well as the finer aspects of setting stop-loss exits
The value of managing trade size and consistent record keeping
The process of putting together your own personal money management system
Unlike other books that focus on the complex mathematical theories behind money management, this book presents its system in straightforward, easy-to-understand terms that will allow you to quickly see how these concepts work and immediately benefit from the value of effectively managing risk.
BENNETT A. MCDOWELL is the founder of TradersCoach.com (R) and an expert in technical analysis and complex trading platforms. Earlier in his career as a financial advisor, McDowell used his own proprietary trading system to serve a community of high-net-worth clients. This system is now known as Applied Reality Trading (R), or ART (R), and is used by traders around the world in over forty countries. McDowell lectures nationally and writes articles for many leading trading publications, including Technical Analysis of Stocks & Commodities magazine. He is a recognized leader in trading education and is honored to be included as a member of the eSignal "Trading with the Masters" team. McDowell is also author of The ART (R) of Trading, which is published by Wiley.
Foreword vii Preface ix Acknowledgments xi Diclaimer xiii INTRODUCTION This is My Money Management System 1 PART ONE Psychology of Risk Control 7 CHAPTER 1 It Just Ain t Sexy! 9 CHAPTER 2 Confidence in Your Plan 15 CHAPTER 3 Yin and Yang 23 CHAPTER 4 Risk Psychology and The Trader s Mindset 31 PART TWO Stop-Loss Exits 37 CHAPTER 5 Not Every Trade Will be a Winner 39 CHAPTER 6 Entry Rules and Your Trading System 45 CHAPTER 7 Stop-Loss Exit Rules 55 CHAPTER 8 Scaling Out and Scaling In 65 PART THREE Trade Size Does Matter 73 CHAPTER 9 Using Risk-of-Ruin Tables and the Optimal f Formula 75 CHAPTER 10 Using the Two Percent Risk Formula and Proper Trade Size Formula 83 PART FOUR Record Keeping and Profit/Loss Analysis 89 CHAPTER 11 Tracking Profit and Loss Results and More Formulas for Success 91 CHAPTER 12 Using Trade Posting Cards and Ledgers 99 PART FIVE Design Your Own Plan 131 CHAPTER 13 Know Thyself Your Risk Profile and Discipline Profile 133 CHAPTER 14 Risk Management Rules to Choose From 139 Epilogue 149 APPENDIX A Getting Started with Your Trade Size Calculator Software 151 APPENDIX B The Trader s Assistant Record Keeping System 153 APPENDIX C The Art of Paper Trading 167 APPENDIX D Resources 173 Glossary 179 About the Author 203 Index 205