Dedicated Trader
Trade Money Management ‚ No Trader Can Succeed Without It!
As a trader, you need to realize just how important money management in trading is. In fact, it’s virtually impossible for anyone to build a successful trading business with proper trade money management.
The skills you require for successful trading are skills you have to learn. Nobody is born a trader. Instead, together with a well tested plan, it requires a huge amount of discipline and an extremely strong will. Even one of the top trading gurus, Dr Van Tharp, states that successful trading is all about mindset and psychology.
Cutting losses and allowing profits to run, is a fundamental rule which all successful traders follow but I can assure you, it’s easier said than done, particularly when you’re in the thick of it and you’re experiencing a string of losses. In fact, without a proper trading psychology, every bone in your body will be telling you to let your losses run, as you desperately hope the tide will change before all is lost. This is exactly why no trader should fail to see the importance of a trading psychology.
You need to be capable of going against the grain if you’re to win in trading.
You need to realize that without proper trade money management at the centre of your system, one bad trade could spell absolute disaster. Sure, a perfect system should always be 100% accurate but I can assure you they’re not always accurate, so yes, one loss could mean you loose everything. Contrary to what you may have heard its trade money management that makes a solid system, rather than a market full of money making opportunities and magical trade entries. The bottom line is; trade money management protects your capital.
Considering just how critical trade money management is, I find it alarming that it’s rarely even mentioned in courses. In fact, I’m yet to find a course which explains trade money management as it should be explained.
No matter what markets you trade in, and no matter what methods you choose, trade money management is critical to your success. In fact, many traders even refer to it as being the “Holy Grail” of trading. I’m certainly not insinuating that I’m the only trader to have discovered this because there are scores of stories where money management is cited as being responsible for great success. The fact is, trade money management has to be applied, irrespective of the system you use and what’s more, there can be no exceptions.
Trust me, knowing these trade money management rules, or trading rules, is one thing, but actually applying them is a different ball game altogether. In fact, if your trading is not going quite as well as you’d hoped for, my guess is that a lack of discipline is to blame, with regards to money management in trading.
No matter how far down the road you are, a single change of strategy can mean the difference between mediocre results and explosive results.
Essentially, you need to thoroughly understand what you’re doing and also why you’re doing it. Having a rock solid system in place means you’ll no longer be dependent on gurus and tips as a source of information.
Primarily, you need to be confident when you enter into trade and the way to achieve that is by ensuring you have an effective exit strategy in place. Not only does this boost your confidence, but it also makes it possible to manage even the most aggressive portfolios. Above all, by ensuring your risks are well within your risk tolerance, you’ll also have a good night’s rest.
Before I end off, I just want to point out that I wrote this article essentially as an introduction to trade money management. The bottom line is; by implementing masterful trade money management, you will reach all your goals. In fact, simply following all my future articles and applying what you learn, you’ll soon be able to master the markets using excellent trade money management.
TCBM: Hbdach