Hi all, I've been on the forum for a little while so I thought I'd introduce myself and try and garner some opinion on money management. I couldn't really see a suitable "general" area for a discussion on money management so I hope this is appropriate.

So; me then. I live in Cornwall, don't run very well (the name's a clue) and have big dreams of becoming a "full-time" trader and giving up my "normal" job. I've only been "trading" per se for about 3 months but have bought and sold shares for around 4 years. The shares have been moderately successful but for small amounts (total invested in shares < £10k). My trading pot is also very small (i.e. hundreds) at the moment. I may put some more in if one of my shares suddenly rockets . Overall I am down on my trading account - largely because of money management I suspect.

Rather than go over my money management mistakes here, I wonder if anyone has any thoughts on things like stake per trade as a % of pot etc. I know it has specific levels stated in LFO for example and they seem sensible but I'm starting to think that this is the most important aspect of trading. I'd like to gain the benefit of people's experience in this area if I can. Success stories very welcome!!

Thanks in advance and good luck when trading all!

Hi,

Thanks for the post - For what its worth we will chuck in a couple of high level views of our own.

Money management is, as you say, crucial. As a rule of thumb we will typically risk 2% per trade where we know we will be in and out of the market more than once a day. For systems where we know we will only be in the market once a day we are happy to raise this to 3%. The only time we risk 5% is on the DOW Letter service (as stated on their website).

So make sure you use the Free Trade Sizer - link here.


ReviewTeam - www.systemsfortraders.com

Hi,

Thank you for the post, Great stuff

Interesting points there. I currently use a couple of systems on one pot of cash and a robot on a separate pot of cash. The robot trades at specific times and quite rarely. I often wonder if I should be calculating my 2% across the sum of the two pots or just on the segregated pot (if you see what I mean!). Any ideas?

Just our view and a simplistic one really - We do intend to do a detailed article on this sometime this year.

Again, this is all subject to your own view on risk. Do you wish to be 1% on each system and thus 2% total market exposure or do you want to double that exposure. We will typically limit exposure to a maximum of 10% of our total trading account across the various systems we trade. Thus, we may trade one at 3%, and two others at 2%, so a 7% exposure. We could split this down to 1.5% and 1% and reduce our exposure by half - It's all about personal attitude at the end of day.

I like your approach. 2% exposure for a system whilst I find my feet seems ok - Lazy Trader made me a bit edgy with its 5%. I'm adopting the 10% maximum as of now. I stopped and thought - if the markets go pop one day and all systems go crazy, how much loss would allow me to shrug it off and come back to the table tomorrow? More than 10% would make me question it at the moment as I'm not achieving fantastic growth yet.

Hello !
I am also a new member. Would a newcomer be warmly welcome here? Good day you guy !