Money management principles

7) Money Management Principles
My experience is the traders who fail mostly do so because they either fail to establish good money management practices early on - or get carried away by the excitement of trading and begin ignoring them.

Locking in profits is about sound money management principles. Before you become a full-time trader, did you allow your employer to deposit your paycheck, only to come back 3 days later and take 50% of it away from you. Of course not.

Steps '2' and '3' represent prudent risk and money management principles that should be employed. This simple trading system would have yielded two profitable trades totaling 85 'pips', but do remember that the past is no guarantee for the future.

Today we are going to talk more about money management principles, specifically market capitalization. You don't see stock market capitalization discussed very often, which surprises me because I am frequently asked, "how much should I trade with?

One can apply different money management principles for the exit of a trade, but the basic concept to remember is that a change is indicated when the PSAR flips to the other side of price.
About the author ...

- the key principles of trading successfully
- the importance of developing and following a trading plan
- thorough money management principles, and
- astute observations and key insights into the practical nature of trading ...

See also: Trading, Market, Profit, Trader, Point