Stories abound of traders who claim to have discovered proof-positive techniques for predicting prices, and then offer to sell the information to you for a price. In my experience, genuine fool-proof techniques are very hard to come by, and I would advise you to be very careful and skeptical of such grand claims. By Chuck Hackett My mission here is to lay out a working example of how money management fits into the trading plan. You don't have to follow this exact example in your trading, but I believe that even if you apply only part of it, you will greatly improve your chances of survival and of ultimately becoming a member of that magical ten percent winner's club. First, a little background.
Most traders seem to be more concerned with the latest and greatest method of getting into a market.
Getting in is the easiest thing to do. It is interesting to note how much less is written about getting out than getting in, since getting out is just important as getting in. Many traders feel they have made a terrible mistake immediately after having gotten in. This order is implemented when a trader doesn't want to take a loss according to the original stop loss plan, and instead wants to risk more to see if the trade will work out. The sense of having made a mistake becomes so strong that they get back out with a small loss, or hold on, blindly riding the trade through profits to a large loss.