Charttraders
Money Management
      One of the easiest to preach and most difficult to do is to manage one's own money. It could apply to your personal finances but in this case we will be discussing the trading aspect of it.  Most trading books would have this chapter at the end but I prefer to have this right in the beginning as it is here where you MUST learn the methodology to manage your money well before trading.
        Traders should right from the very beginning draw out a plan on how they are going to manage their money.  Discipline plays an important role in trading.  Statistics have shown
that successful traders lose just as well as win but discipline has taught them to cut their losses before the situation gets worse..
        Accepting minimal losses when a trade turns sour is perfectly fine.
It should be treated as a business cost.
         Thus I find that one must follow a set of rules and write out a plan
for himself to follow.  It begins with having a positive mental attitude and
having a burning desire to achieve a specific goal.
          Begin with socializing with traders who think alike.  I normally
begin my day with a written statement which reads something like this:

          Today is the beginning of a new day.  I will try my level best
           to look out for opportunities in the market and trade to profit
           from it with calculated Risk/Reward Parameters.
           I shall follow my trading strategies with the strictest discipline.
           The market is a better trader than I am, so I shall be aware of
           the trading pitfalls of being careless.
           A sound money management strategy will be my holy grail.


        Now that we have finished step one, lets move on to only but a few
important rules that a trader or investor should follow:

                                  Trading Psycology:

         One would say that the first rule is the most important and should be
seriously dealt with until one can master his personal emotions well.
          Thus it is important to choose a method of trading that is consistant
to your personality and comfort level.  If you cannot bear to give back
significant profits, then a long term trend-following approach - even if it is
a good one - will be a disaster, because you will never be able to follow it.
If you dont want to watch the quote screen all day (or can't), don't try a day
trading method.
          If you cannot bear the emotional strain of making trading decisions,
then try to develope a mechanical system for trading the markets.
          The approach you use must be right for you; it must feel comfortable.

          The importance of this cannot be overemphazised

           Virtually every successful trader has ended up with a trading style
that has suited his own personality.

    

                                       

                                                        PART    II
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