Traderji.com


The most important factor in successful trading

Discuss The most important factor in successful trading at the Risk & Money Management within the Traderji.com; The most important factor in successful trading The most important factor in successful trading is ...


Go Back   Traderji.com > METHODS & STRATEGIES > Risk & Money Management


Risk & Money Management Discuss risk and money management techniques and methods to protect your trading capital.


Reply
 
Thread Tools
  #1  
Old 20th September 2004, 10:40 AM
Member
 
Join Date: Jul 2004
Posts: 29
Thanks: 0
Thanked 9 Times in 4 Posts
TradingPicks is on a distinguished road
Default The most important factor in successful trading

The most important factor in successful trading

Quote:
The most important factor in successful trading is money
management. One still has to be savvy at chart forecasting and-or
fundamental analysis, but it's the money management factor that
will make or break a trader.

Over the years, I have listened to the best traders in the
business talk about what makes them succeed in this challenging
arena, and nearly every one emphasizes the importance of sound
money management.

Surviving in the market absolutely requires practicing sound money
management. Even a rookie trader who starts out with a hot hand
will eventually find that at least some trades are not going to go
his way. And if he has not employed good money management
principles on those losing trades, he will likely have squandered
his trading profits and his entire trading account.

Conversely, the novice trader who uses good, conservative money
management techniques will be able to withstand some losses and be
able to trade another day. The ability to take a loss and trade
another day is the key to survival--and ultimate success-- in the
futures trading arena.

Here's an important point to consider, regarding money management
and successful futures trading: Most successful futures traders
will tell you that during the span of a year they have more losing
trades than winning trades. Then why are they successful? Because
of good money management. Successful traders set tight stops to
get out of losing positions quickly; and they let the winners ride
out the trend. On the balance sheet, a few big winning trades will
more than offset the more numerous small losers. Good money
management allows for that to happen.

Here are just a few very general money-management guidelines:

-- For smaller-capitalized traders, don't commit more than one-
third of your trading capital to one trade. For medium- and
larger- capitalized traders, you should not commit more than 10%
of your capital to one trade. The guideline here is, the larger
your trading account, the smaller your commitment should be to one
trade.

-- Use tight protective stops in all your trades. Cut your losses
short and let the winners ride the trend.

-- Never, never, never add to a losing position.

-- Your risk-reward ratio should be at least three to one. In
other words, if your risk of loss is Rs. 1,000, your profit potential
should be at least Rs. 3,000.

I can't stress enough that survival in the trading arena
(especially for beginners) should be your top priority.
And this can only be done with proper money management principles.


Advertisements

Reply With Quote
Advertisements
  #2  
Old 20th September 2004, 11:11 AM
hmp hmp is offline
Member
 
Join Date: May 2004
Posts: 672
Thanks: 791
Thanked 292 Times in 199 Posts
hmp is a jewel in the roughhmp is a jewel in the roughhmp is a jewel in the roughhmp is a jewel in the rough
Default Re:can somebody explain

recently i ve gone through ryan jones e book on money management. can anybody explain how to apply his fixed ratio method to our indian stocks. suppose i dont want to trade in futures and options and i simply want to buy and sell in market by taking delivery for short terms?
traderji i request u to throw some light on this topic.

thanks and with regards

hmpatil
Reply With Quote
  #3  
Old 20th September 2004, 11:29 AM
Member
 
Join Date: Jul 2004
Posts: 29
Thanks: 0
Thanked 9 Times in 4 Posts
TradingPicks is on a distinguished road
Default Re: can somebody explain

Quote:
Originally Posted by hmp
recently i ve gone through ryan jones e book on money management. can anybody explain how to apply his fixed ratio method to our indian stocks.
thanks and with regards

hmpatil
If you could explain what this fixed ratio method (is it % retracement or % of move) is maybe I can help you!
Reply With Quote
  #4  
Old 22nd October 2004, 02:24 PM
Member
 
Join Date: Oct 2004
Location: Marine Lines, Mumbai
Posts: 17
Thanks: 0
Thanked 0 Times in 0 Posts
Gurmeet is on a distinguished road
Default Re: The most important factor in successful trading

Good Post !!! Wisdom !!!

Cheers
Gurmeet
Reply With Quote
  #5  
Old 25th October 2004, 12:57 AM
CreditViolet
Guest
 
Posts: n/a
Default Re: The most important factor in successful trading

Money management is getting a lot of attention these days but if u dont have a good strategy to enter and exit it will help only to lose slowly.A solid technique is required before applying money management parameters to it
Reply With Quote
  #6  
Old 25th October 2004, 03:05 PM
Member
 
Join Date: Jun 2004
Posts: 185
Thanks: 0
Thanked 2 Times in 2 Posts
arun is on a distinguished road
Default Re: The most important factor in successful trading

Money management is the ONLY SINGLE reason why I am still in the markets. If it was not for MONEY MANAGEMENT I would have been wiped out!

I can now sleep like a baby at night! All thanks to traderedgeindia.com
Reply With Quote
  #7  
Old 1st November 2004, 02:07 AM
Banned
 
Join Date: Jul 2004
Posts: 8,784
Thanks: 1,145
Thanked 13,330 Times in 2,393 Posts
Saint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond repute
Saint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond reputeSaint has a reputation beyond repute
Smile Re: The most important factor in successful trading

Nice article.......Agree with creditviolet as well.Perfect entry strategy followed by a neat risk/money management is everything.Position sizing is another very important thing that we as traders must adhere to at all times.We tend to bet the farm when we are overly bullish......a huge mistake!!Everyone must have a percentage risk per trade in their trading plan.....and follow it religiously.
Reply With Quote
The Following User Says Thank You to Saint For This Useful Post:
Coudy (5th September 2008)
  #8  
Old 4th November 2004, 12:32 AM
hmp hmp is offline
Member
 
Join Date: May 2004
Posts: 672
Thanks: 791
Thanked 292 Times in 199 Posts
hmp is a jewel in the roughhmp is a jewel in the roughhmp is a jewel in the roughhmp is a jewel in the rough
Default Re: The most important factor in successful trading

can any experienced trader suggest from his long experience what is the solid strategy for trading which is atleast 60% successfull?
Reply With Quote
  #9  
Old 4th November 2004, 07:40 AM
Super Moderator
 
Join Date: Jun 2004
Posts: 1,787
Thanks: 2
Thanked 793 Times in 128 Posts
Traderji has disabled reputation
Default Re: The most important factor in successful trading

Quote:
Originally Posted by hmp
can any experienced trader suggest from his long experience what is the solid strategy for trading which is atleast 60% successfull?
The first element of any trading plan is the amount of capital you intend to invest. This is up to you, but you should understand that there is a direct relationship between the amount of capital you commit and your probability of success. The more you invest, the greater is the likelihood that you will make money.

An important thing to keep in mind when deciding how much to commit initially to trading is that the amount you invest must be "risk capital." Risk capital is defined as money you can afford to lose without affecting your standard of living. It should also be money that you feel comfortable risking. Think of your trading account as an investment in a business. Many businesses fail. That's life. Make sure you won't be so afraid of losing money that it will affect your ability to make correct trading decisions.

The next part of your trading plan involves how you will make your actual buying and selling decisions. Under what conditions will you enter trades? When will you exit your trades? What markets will you trade?

There are four cardinal principles which should be part of every trading strategy.

They are:

1) Trade with the trend,

2) Cut losses short,

3) Let profits run,

4) Manage risk.

You should make sure your strategy includes each of these requirements for success.
Reply With Quote
  #10  
Old 5th November 2004, 07:49 AM
Member
 
Join Date: Jun 2004
Posts: 185
Thanks: 0
Thanked 2 Times in 2 Posts
arun is on a distinguished road
Default Re: The most important factor in successful trading

Quote:
Originally Posted by Traderji
The first element of any trading plan is the amount of capital you intend to invest. This is up to you, but you should understand that there is a direct relationship between the amount of capital you commit and your probability of success. The more you invest, the greater is the likelihood that you will make money.

An important thing to keep in mind when deciding how much to commit initially to trading is that the amount you invest must be "risk capital." Risk capital is defined as money you can afford to lose without affecting your standard of living. It should also be money that you feel comfortable risking. Think of your trading account as an investment in a business. Many businesses fail. That's life. Make sure you won't be so afraid of losing money that it will affect your ability to make correct trading decisions.

The next part of your trading plan involves how you will make your actual buying and selling decisions. Under what conditions will you enter trades? When will you exit your trades? What markets will you trade?

There are four cardinal principles which should be part of every trading strategy.

They are:

1) Trade with the trend,

2) Cut losses short,

3) Let profits run,

4) Manage risk.

You should make sure your strategy includes each of these requirements for success.
How much you are correct traderji. One of the best posts in this forum for anybody venturing into trading. You have summed it very well here. I wish I had a forum like this when I ventured into trading a few years ago, I would have saved a lot of money and heartburn! Anyway sometimes we all learn from our experience and thanks to tradersedgeindia.com I am wiser and richer today.

Also I just renewed my subscription with tradersedgeindia.com and got a very good deal for a yearly renewal (special offer on their 5th anniversary). Just thought that would let you all know if you are renewing your subscription for a year. This is not available on their website so you may have to contact them directly.

Advertisements

Reply With Quote
Reply

Bookmarks


Advertise Here


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads for: The most important factor in successful trading
Thread Thread Starter Forum Replies Last Post
Trading Without Ego Anil Words of Wisdom 12 9th September 2011 07:32 PM
Recommended Books on Practical Trading Strategies Traderji Books 14 15th September 2010 04:36 PM
Practical trading education part II-www.technicaltrends.com sh50 Technical Analysis 26 10th March 2009 12:04 PM
Trading: A Journey, Not a Destination nkpanjiyar Words of Wisdom 4 16th April 2005 12:14 PM
A "Holiday"from trading jaideep General Chit Chat 8 8th March 2005 06:27 AM


All times are GMT +5.5. The time now is 10:38 AM.

Indemnity, Disclaimer & Disclosure Notice:
By visiting Traderji.com you automatically indicate that you agree to our Forum Rules, Indemnity, Disclaimer & Disclosure Notice and General Content Disclaimer Notice and indemnify Traderji.com, its associates and related parties of all claims howsoever resulting from the usage of the forum/site.
Disclaimer: Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility. You are recommended to make appropriate enquiries and seek appropriate advise before sending money, incurring any expenses, acting on recommendations or entering into any commitment in relation to any advertisement published here. Traderji.com does not vouch for any claims made by the advertisers of products and services. Traderji.com will not be held liable for any consequences in the event such claims are not honoured by the advertisers. Traderji.com will not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of any information by anybody mentioned anywhere on this site.
Disclosure: The information in this forum is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.
All names or products mentioned are trademarks or registered trademarks of their respective owners.
General Content Disclaimer Notice:
In light of our policy of encouraging candid, open exchanges of views and the rapid distribution of information originating from many sources, Traderji.com cannot determine the accuracy or legality of any information that may be uploaded to the forum. Opinions, advice and all other information expressed by participants in discussions are those of the author. You rely on such information at your own risk. You are urged to seek professional advice for specific, individual situations and not rely solely on advice or opinions given in the discussions. Since Traderji.com is an open and free discussion forum, any comments made by members of this forum in their posts reflect their own views and not of the owner or administrator of Traderji.com. Thus the owner/administrator indemnify themselves of all claims whatsoever and will not be liable or responsible for any members comments/views in this forum Traderji.com. Although we constantly delete all irrelevant content and/or SPAM, if you should find any objectionable or offensive posts made by members of this forum which you would like to bring to our notice for removal then please Contact Us.
 


Copyright © www.Traderji.com 2001 - , All rights reserved.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267