This is because money management is barely an afterthought for so many traders.
Many people avoid the topics of risk and money management because they realize that by controlling risk they will not become rich overnight. But the fact is that they will not become rich at all if they don't learn how to manage money.
One of the pillars of the industry is the search for the holy grail and indeed the industry is infatuated with trading systems. Many traders, specially those who go through that initial phase of frustrating losses, look for mechanized methods of trading that just generate entry and exit signals to follow, no questions asked. However, they rarely search for a a system of money management able to generate "signals" that dictate how to size and managepositions. But the reality is that these techniques exist and, although being mechanical, they are much more effective than mechanical buy and sell signal generators.
Have you ever stopped to ask yourself that question: if money is to be made through trading systems, why the big majority of individual traders end up break-even or losing money? This is because money management is barely an afterthought for so many traders.
While most novice traders think there is some kind of order to the market that only few people know, and tend to focus on finding an inefficiency or an edge in the markets, the greatest opportunity for profit is often found in amoney management method. The key to wealth accumulation in the markets does not come from knowing where you get in and out. Neither it comes from being able to accurately forecast market direction.
Successful traders are those who realize that money management has to be part of the trading plan. Sadly, many people never even come to this realization. Read More
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VIDEO: MONEY MANAGEMENT - Why your money management sucks and what to do about it! - Dirk du Toit
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Editors’ Picks
EUR/USD remains below 1.1850 after US data
EUR/USD struggles to gain traction and trades in a narrow range below 1.1850 on Wednesday. The US Dollar stays resilient against its rivals following the better-than-expected Durable Goods Orders and housing data, limiting the pair's upside ahead of FOMC Minutes.
GBP/USD stays in narrow channel above 1.3550 ahead of FOMC Minutes
GBP/USD holds its ground following Tuesday's slide and moves sideways above 1.3550 midweek. Although the data from the UK confirmed that inflation cooled in January, the positive shift seen in market mood helps the pair keep its footing as investors wait for the Fed to publish the minnutes of the January policy meeting.
USD/JPY holds gains near 154.00 ahead of the Fed’s minutes
USD/JPY retraces Tuesday's losses and returns near weekly highs in the area of 154.00. The US Dollar trims losses in quiet markets with all eyes on the Fed's minutes. Weak Japanese GDP data resurfaced concerns about Japan's fiscal stability and halted JPY's recovery.
Editors’ Picks
EUR/USD remains below 1.1850 after US data
EUR/USD struggles to gain traction and trades in a narrow range below 1.1850 on Wednesday. The US Dollar stays resilient against its rivals following the better-than-expected Durable Goods Orders and housing data, limiting the pair's upside ahead of FOMC Minutes.
GBP/USD stays in narrow channel above 1.3550 ahead of FOMC Minutes
GBP/USD holds its ground following Tuesday's slide and moves sideways above 1.3550 midweek. Although the data from the UK confirmed that inflation cooled in January, the positive shift seen in market mood helps the pair keep its footing as investors wait for the Fed to publish the minnutes of the January policy meeting.
Gold regains some shine, retargets $5,000 ahead of FOMC Minutes
Gold gathers fresh upside traction on Wednesday, leaving part of the weakness seen at the beginning of the week and refocusing its attention to the key $5,000 mark per troy ounce, all ahead of the release of the FOMC Minutes and despite the modest uptick in the US Dollar.
Pi Network rally defies market pressure ahead of its first anniversary
Pi Network is trading above $0.1900 at press time on Wednesday, extending the weekly gains by nearly 8% so far. The steady recovery is supported by a short-term pause in mainnet migration, which reduces pressure on the PI token supply for Centralized Exchanges. The technical outlook focuses on the $0.1919 resistance as bullish momentum increases.
Mixed UK inflation data no gamechanger for the Bank of England
Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.
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