So after years of seaching..

[kut2k2]

1) Money Management is very important

2) Money Management is not the most important variable in a trading plan...it is equally important with other components

Agreed on both points.

3) It doesn't matter if Money Management is consider an edge or not an edge because it won't change the fact that its important

It matters. MM is not edge. This is most glaringly obvious with casino games. If you play casino craps, no MM scheme in the world will save your betting account in the long run simply because you don't have the edge. Your opponent (the house) has the edge. If you play roulette, same thing: your opponent (the house) has the edge. MM will not save you. Clearly true edge is something completely separate from MM. Yes some MM schemes are better than others and there's an advantage to using the best MM scheme you can apply in a given situation. But unless you've also achieved that true edge that has nothing to do with MM, you will fail eventually.

Buy1Sell2 has gone full crank on this matter. I hope he gets help.

4) You will still lose if you have excellent Money Management but poor trading skills (there's many online academic articles and statistics that proves such...use Google to find them or just review some of the ET journals). Simply, money management alone...you will still fail if that's all you're using.

Exactly. Poor trading skills (aka poor timing) means you have no edge. Has nothing to do with MM, "prudent" or otherwise.

 

[Turveyd]

MM is just an easy concept to talk about to sound smart, really the maths are simple dont risk more than 2% on any trade, obviously change the 2% based on win rate, odds of strings of losers, but thats it.

8 year olds can handle above.

Direction, and trading with the direction is the edge, not trying to pick tops or bottoms to reverse, orvsome bogus SR line, which direction will trample over.

Not saying trading direction is easy, merely that is works.

 

[OddTrader]

It matters. MM is not edge.

Whether an Edge or not is in the eyes of the beholder!

imo, there are directional edge (for viability), money management edge (for profit) and risk management edge (for tail risk)!

Just 2 cents!

 

[wrbtrader]

Let it be noted that none of the high win system posters was ever willing to post real time calls that included entries and stop loss levels to confirm validity of their high win rates. All we get is constant excuses why it can't be done publicly. Well, says it all. Until this happens for all to see, high win systems remain to be seen in action to be believed in.

Real edge IS in "prudent money management", win some, lose some, win more than lose. End of story.

They post elsewhere. ET isn't the only place in town.

Simply, its a big world out there. My favorite online poster competed two years in a roll at the Salon du Trading competition and plans to do it again this year. That's an audited trading competition in front of a live audience and all trade executions verified live by judges as they are executed. In addition, charts and trade executions are viewed on a big screen so that the live audience can view. Further, the audience is "allowed" to ask questions as the trades are being placed.

Yet, they don't consider themselves "system traders". Thus, maybe we're talking about different folks. For example, some folks post live trades and broker statements on Stocktwits.com, IRC Othernet/Financialchat servers...I know a few that's been doing such for +10 years (note: Stocktwits has not been around as long as IRC).

Please clarify which of the above folks you're talking about considering you're making a blanket statement with no specific names. Regardless, they share the view that money management is important but not the only piece of the puzzle one needs to be profitable.

In addition, don't forget the old "Trader P/L Statement" threads here at ET...folks there posted broker statements. Remember Lescor ?

Tough to debate with profitable traders. I learned to stop doing such a long time ago.

I also learned not to debate with academia stats about this particular issue unless there's a flaw in the research study...you can have the best money management and you will still lose as a trader if you're missing other pieces of the trading plan.

End of Story

 

[wrbtrader]

Agreed on both points.

It matters. MM is not edge...

I think we all can agree that money management is important but not the only thing a trader uses. MM is just a piece of the puzzle. There are a few money management threads here at ET in the past where some of the well known ET members have posted helpful info within.

Yet, they are bashed today and accused of not using MM.

 

[i960]

Hilarious how in all these "edge" idle chit chat threads...according to most here, "lucky tennis shoes" (ie luck in the short term) is an edge

I'll have you know, Mr Bare, lucky tennis shoes ARE a proven edge! See below @ 30:30 (just hit play)

 

[Buy1Sell2]

I oft seen this discussion between games of chance and trading. There of course is no edge in games of chance and money management is not an edge in those games. Blackjack and Poker are necessarily different than Roulette et al. and are not games of chance. ---The major flaw in using this game of chance comparison versus trading, is that it is impossible to predict future outcomes in Roulette and Craps etc, but direction in trading is able to predicted with a much greater than 50% clip. Anyone is able to predict direction reliably in trading. It is the prudent management of the trades taken in that direction that is the true edge in trading. Most traders are unable to manage their trades, thus most traders fail. There is no valid argument against this. Money management is the most important aspect of trading successfully. Capital and the prudent use thereof is the only true edge in trading.

 

[Buy1Sell2]

MM is just an easy concept to talk about to sound smart, really the maths are simple dont risk more than 2% on any trade

8 year olds can handle above.

Unfortunately, most traders cannot.

 

[Buy1Sell2]

If one had an edge and could often 'get the direction right' what makes you think that they'd get stopped out or fail to take a profit? I'd imagine the same edge that helped them get into a profitable trade would help them get OUT at a good time, too.

OMG

 

[Buy1Sell2]

With that said, there's a few folks running around ET that believe just because someone doesn't talk about their money management...they must not be using it.

The problem is that you have people teaching and mentoring systems without rigorous discussions concerning the most important aspect of trading which is prudent money management. They further do not show any realtime trades or results so the students can ascertain whether there is validity to their system. This is unacceptable.