The only "Holy Grail" is money management?

Quote from crgarcia:

The only "Holy Grail" is money management?
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Not sure why you ended your sentence with a question mark. For daytrading money management is the key to success.

Every new trader thinks they're going to pick 70+% winners and the money will take care of itself. Then reality sets in.

As time goes by you realize 40% winners with a good risk reward ain't bad.

~Mike
 
Quote from ThePipProphet:

Dtrader98, at the risk of sounding ignorant, what does LTCM mean? My first thought was LTCM=Lets Talk Cash Money...lol...
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The quintessential example of money management necessity (outside of maybe niederhoffer).
Long Term Capital Management was the pinnacle of quant hedge funds. Boasting noble laureates and a brilliant team of quantitative analysts on their roster, they would make highly leveraged and speculative bets based upon their superior number crunching (among other strategies, seeking low risk arbitrage based betting strategies) abilities. They became so large and leveraged that it became difficult to find liquidity in positions they needed to exit. For whatever reason, they had a large correlation of trades that turned against them, practically simultaneously; and without going into a long winded discussion of the details: they blew up.

So here you have the perfect anecdote (albeit rare) of the superior trader getting smoked by not adhering to money management (one could argue that they did, but that's debatable; at a certain point the leaders began taking overly arrogant risks).

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

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trading method = ying
money mgmt = yang

One cannot prosper without the other.
Therein lies your (legal) holy grail.

"In a negative expectation game, there is no money-management scheme that will make you a winner,"
-Ralph Vince
 
Quote from dtrader98:



So here you have the perfect anecdote (albeit rare) of the superior trader getting smoked by not adhering to money management (one could argue that they did, but that's debatable; at a certain point the leaders began taking overly arrogant risks).

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

-------------------------------
trading method = ying
money mgmt = yang

One cannot prosper without the other.
Therein lies your (legal) holy grail.

"In a negative expectation game, there is no money-management scheme that will make you a winner,"
-Ralph Vince
More...

Dtrader98 thanks for the explanation. And the Ying Yang I totally agree with 100%. As you said, that is your Holy Grail!!!

I nod my head to you as you gracefully ended that debate.
 
Hi Prophet,
On the surface your proposition appears to make sense but one important issue is the probability of your trader lasting long enough to actually learn to stop rolling the dice and use good risk/ money management. Therefore I believe they generally result in dissimilar outcomes. To compare Trust deed money management and trading money management [experience] would simply be the equivalent of comparing apples and oranges [pun] and quite a fruitless excerise.

As at least one wise man said "there's simply no substitute for experience."

Good luck with your trading
Johno
 
Quote from traderdragon2:

Perfect money management alone will lose you money in the markets. Fact.
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I agree. Even if you play blackjack perfectly, the house pretty much still has the edge over time.
 
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