Trading Expert Discovers Ways To Beat Stock Market Odds With Money Management - Answering Service Resources

Home
>
Investing
>
Trading Expert Discovers Ways To Beat Stock Market Odds With Money Management

Trading Expert Discovers Ways To Beat Stock Market Odds With Money Management

The first point to mastering money management is that you have to understand when you're trading on the stock market is that you are playing the odds ? but unlike many forms of gambling, you can make money. The key to making this money is to respect the risk that is part of the market, and manage it. Money management is a set of rules and guidelines that enables you to turn a profit. By being triumphant with your money management skills, you can keep your risk at a level at which you're comfortable with, keep from making poor trading decisions, and ensure you don't loose your trading capital. This is why it is so important to follow money management rules.

Why do these money management rules work? You know, it's funny. I once thought I had a fool-proof way of making money on roulette. You see, I'd bet on red and black. I'd sit at the table. After the ball had landed on black or red five times in a row, I would start betting on the opposite color.

Let's say I had five reds in a row. I would then start to bet on black. If I was wrong, I would go ahead and double down, so that if I started my bet at one dollar, the next time I would be able to bet two dollars, then four dollars, then eight, then 16. With this system, eventually I'd win and I'd come out one dollar ahead.

So, here I am at 23 and I've set up my computer program to test my theory. I made a ridiculous amount of money in the program. I really thought I had the Holy Grail here. But, if it's so easy for an 23 year old to figure it out, why aren't all the casinos out of business and why aren't we're all millionaires? Unfortunately, roulette doesn't work this way.

You see, if we're flipping a coin, heads has a 50 percent chance of turning up on each flip of the coin and so does tails. But, each flip is independent of the last. The last coin toss has nothing to do with the one before it, each flip is a random event. This means it's possible to get a hundred heads in a row if you do it long enough, and believe it or not, that's what happened to me. When I first played roulette in a casino, I saw a string of 23 blacks in a row. I went home defeated.

Trading is the same. A percentage of your trades will not work out. A certain percentage will not go in your favoured direction, and the next trade has nothing to do with the last one. Even if you have the world's most accurate method, over time you will go broke if you don't practice good money management.

Money management rules include defining your trading float, setting your maximum loss, calculating your stop loss, and most importantly learning how to choose your position size. Once these rules are in place, it's important to stay with them. They will keep you from making snap decisions, and playing the odds longer than you should. This is why money management rules are a critical part of any effective trading system.

-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
David Jenyns is recognized as the leading expert when it
comes to designing profitable stock trading systems.

Discover the "secret formula" of trading that anyone can use
to consistently generate BIG profits from the market by
downloading your FREE copy of David's new Ultimate
Stock Trading Systems course.

Click Here To Download ==> Stock Trading Systems
http://www.ultimate-trading-systems.com/s tocks.html
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-

In The News:

Fidelity hires new head of personal investing
Boston Globe, United States - 11 hours ago
Fidelity Investments has hired ING Groep NV's Kathleen Murphy as president of its personal investing unit. Murphy, 45, will start at Fidelity on Jan. ...
Highest-Level Executive In State To Leave ING Hartford Courant
ING to split annuities and retirement units InvestmentNews
all 4 news articles

Forget the Investing Gene
Motley Fool - 34 minutes ago
Just as some parents will inevitably use this test as the sole reason to keep their kids from certain sports, we sometimes keep ourselves from investing for ...

Seattle Post Intelligencer
Dump the CEOs Before Investing in US Industry
OpEdNews, PA - 33 minutes ago
... investment banking, airlines, automakers, credit-card companies, or raw material producers will result in predictable repetition of the dismal patterns ...
Video: Chrysler Exec: Failure Could Spark Depression AssociatedPress
Valuing Lemons: GM and Ford Wall Street Journal Blogs
Bankruptcy for Big Three should be an option Metro Spirit
Chicago Tribuneall 1,981 news articles

UPDATE 1-Baosteel to speed overseas investment, eyes Spain
Reuters - 7 hours ago
By Alison Leung HONG KONG, Dec 5 (Reuters) - Baosteel Group, China's largest steelmaker, plans to speed up overseas investment to take advantage of lower ...
Baosteel May Delay $4 Billion Vale Slab Venture By Nine Months Bloomberg
all 6 news articles

Global Investing Roundups
Money Morning - 7 hours ago
AT&T Inc. (T) said it would scale back 12000 jobs, about 4% of its workforce, between now and the end of 2009 to fight "economic pressures, ...

Telegraph.co.uk
CIC Head Wary of Investing in Western Banks
Wall Street Journal - Dec 2, 2008
Lou Jiwei, who head's China Investment Corp., said the uncertainty surrounding Western banks and the policy decisions that may determine their fate makes it ...
CIC weary of Western banks Thomson Merger News (registration)
China's sovereign wealth fund to avoid western financial firms: report AFP
CIC Now Very Wary of Investment in Foreign Financial Firms ChinaStakes.com
Reuters - In-Forumall 274 news articles

GoldMorgan Stanley, Investing For Deflation, And ETFs Gain By Default
IndexUniverse.com, NY - 1 hour ago
... bonds slip further into negative territory, this article summarising some recent Merrill Lynch research, on investing for deflation, caught my eye. ...

slow and steady investing
CNNMoney.com - 16 hours ago
Investor Daily: During the flat market of 1966-1982, investors who kept investing every month earned better returns. By Adam Lashinsky, senior writer SAN ...

Investing in Pure-Play Companies
Motley Fool - 30 minutes ago
By Selena Maranjian I've written before about the advantages of concentrated or "focused" investing. Focusing your investing attention and dollars just ...

Ball State Investing $17.7M In Emerging Media Reseach Initiative
Broadcast Newsroom, CA - 16 hours ago
By John Eggerton Ball State is in investing $17.7 million in a new Emerging Media reseach initiative. The goal of the initiative, funded with money from the ...

investing - Google News

Answering Service ResourceAnswering Service Resource