Money management secret. Better read this

Yeap, money management is the secret. It allows you to lose money slower and play in the game longer. This does NOT mean that you will win. It means you get to have fun longer. Of course, as long as you drink your coffee and not
make mistakes you will end up winning. Right?

Money management gives the illusion that you are in control. As long as you feel you are in control, you got the pyschology or the emotion on your side.

And if you don’t see or know who the sucker is, then it has to be the market. Why? It is because you got money managment on your side. You get to play longer and have fun.

Go for it and reap all you can from the market…

Yeah. I might be wrong. Let us examine this situation. If Boxer A and Boxer B was in the market or the boxing ring.

STATS:
Boxer A hits only one deadly punch with all his might per round.
Boxer B likes to use money management and use 2% to 5% of his strength only.

QUESTIONS:
Who do you think will be knocked out??? Who do you think will win???

Boxer A misses with his one deadly punch and is worn out after first round

Boxer B Keeps patiently jabing away and wearing down Boxer A until he sees opportunity in 10th round and deliviers a KO

Boxer B, however, cannot do KO because he is using 2% to 5% of his
strength only. This kind of punching is nothing more than an itch to
Boxer A. Yeah, Boxer is B is nothing more than an ITCH.

Therefore, Boxer B gives Boxer A time to recuperate.
Boxer A then knocks out Boxer B on the 2nd, 3rd, or 4th round.

Or more appropriately; Boxer B keeps hitting Boxer A over and over and over with his 2%, since he isn’t using all his strength and energy. Boxer A ends up beaten by many COMPOUNDED smaller blows.

Common, you know as well as I know that money management is nothing more than an illusion. It gives newbies the feeling they are in control.

But in reality, the longer you play the more chance you have of losing.
The purpose of money management is to lose slowly.

Does losing slowly allow you to play longer. You bet.
Yeah. It does. However, the longer you play the more chance you will lose.

LOSING is REAL. WINNING is just a potential and not real. Therefore, the
longer you play the more you will end up crying. Just don’t end up crying.

NOTICE that high reward with small risk does not mean that your reward will
HIT. Most likely, it is the other way around. You stoploss will be hit.
A high and higher reward will only negate your target from being hit.

You sound like the confused one

If you ain’t contributing but arguing, then you are the confused one.
I am the contributor, you are the arguer. It is okay though.

Its pretty simple.

Most people on trading forums are quite clueless, and subsequently they’ll lose money playing a negative sum game. There will be a distribution amongst that group, one or two may be lucky, and they may be profitable, one or two may be very unlucky and suffer very heavy losses but as a group, they’ll lose, and the longer they play, the more they will lose.

Money management is the only thing that allows the group to continue playing, until they either run out of money, or they learn what they need to learn. If these people are dumb enough to take a risk in an environment that they dont understand then money management is a very sensible option, its the only thing that gives them the breathing space to learn. Failure to apply sensible position sizing means they’re out of the game before they even begin.

For those with an edge, money management allows them to optimise their returns, so again, money management makes perfect sense.

In conclusion, if your a clueless half wit, then you should pay very close attention to money management, and if your consistently profitable, you should pay very close attention to money management.

The thing is, even if you dont understand money management, or actively apply money management techniques, you are still using a form of money management, even if you only select the default lot size on your trading platform !

The only way to avoid it, is not to trade at all, and you could argue that even that is a form of money management, 0 risk for 0 reward, or 0 risk for more free time and less stress :smiley:

I dont buy lottery tickets because the lottery has a negative expectancy, lotteries are a tax on the stupid and thats why I’m a shareholder in several lottery companies.

You make a reasonable point that the majority of new traders would be far better off abandoning money management, and risking everything on a single trade, then accepting the outcome and walking away. From the perspective of probability, thats the optimum strategy.

You are right. But reality is not confine to mathematic or probability.
Therefore, it is the wrong base to start on.

Yeah, I don’t want newbies to start off on the wrong base and be shattered.
They will end up crying and feeling hopeless.

However, I get your point. Who cares? As long as somebody is winning.

All I know is that I will become rich eventually and that is all the counts.

I’d argue that its precisely because most traders lack an undertanding of probabilities that they find this business so difficult. Even those who understand the role of probability on an academic level, often have difficulty in accepting those probabilities as they play out resulting in equity swings.

I’m not sure how anyone can manage to cope with this stuff emotionally and psychologically without understanding the role of probability.

Possible. Well, I can not give hints into my system.
All I can say if you want to start with probability, then so be it.

Probability is not necessarily mm or rr, it can be whatever you want.
For all I know, probabililty can be your chance for losing.

And according to Murphy, most will be losers.

I assure you, I neither need or want your system :smiley:

Your comments about money management are technically correct, and pretty much everyone here will fail, and so the optimum strategy is the equivelent of betting everything on red or black. Whilst that is technically correct, it doesnt really help the tiny minority who are trying to improve their knowlegde or develop a startegy. If your going to make statements such as money management is a waste of time, you at least need to back it up with the reasons why. For example, I argued money management was useful because it prolonged exposure allowing people to gain experience, sure the majority will die by bleeding to death slowly rather than by a fast clean execution, but the 5% who make it will do so due to the experience they gain. For those with an edge, money management allows us to optimise returns, or minimise volatility, or minimise risk or whatever floats our boats.

As a matter of principle I dont agree with censorship, but from what I can see, this site is supposed to be for relatively new traders, and therefore it might be in the best interests of the moderators to clear out anything that doesnt really help them achieve their trading goals. The other issue is that those who could contribute are unlikely to do so, if their contribution is constantly drowned out by those with a hidden agenda, so that being the case, a few need to be sacrificed for the good of the majority

The argument is that newbies need to see all perspectives.
They need to see what works for them. They need to build experience
from options they choose. Newbies need all options, not cherrypicked options.

Removing or cherrypicking threads will only limit newbie options.

I wonder why 95% are losing???

Exactly, and thats why they need to limit risk, in order to gain experience. Suggesting they do the equivelent of wacking it all on red is irresponsible, and why your posts and threads need to be deleted imediately !

RR and money management are not the only way to reduce risk.

Here a numerous ways to reduce risk:

  1. Plan your trade.
  2. Trade during pair session and not oustide of session
  3. No trade during news…

Etc… Etc… Therefore, you are wrong to limit newbies to RR and MM.

What’s the maximum gain an experienced trader can have per month? Is 30% gain a reasonable target?