Pooh, whatever works for you and him :) What is money mangement to me has nothing to do with complexities cause I believe in the KISS method. And if we want to be picky, everything, all of life is a gamble.
However, if I may use a cleaning business as an analogy, if I wanted to start the business, it would be a complete gamble to open up a business using my money when I knew absolutely nothing or very little about the business. Even if I knew about cleaning and nothing about the business part it would be more of a gamble than if I first studied the in and outs of the business, set up a business plan, etc. had some idea of what I would do if the business did not work out, how much money I'd put into it, etc. and then invested my money into it.
Well I liken the same to short term trading. I think (and you don't have to agree) that I as a trader need to know two basic things:
1. Myself, my personality, my behaviors and how they relate to my trading strategies i.e. what are the best ways for me to trade without being too stressed out. Can I best day trade, position trade, be aggressive, more conservative, etc.
2. How much money do I have to trade with, i.e. to lose without being stressed out. How can I best position this money, how much money can I afford to lose in a position, i.e. 2%. 5%, 8%. What is my target for gains, 5%, 10%, etc.
So here I want to know my entry and exit targets before I get into a trade.
In other words without being too wordy, I need a plan. In order for me to survive I need to reduce the risk, the gamble if you wish. I need to be able to control my loses and my emotions because I've discovered that I cannot make money and get high at the same time.
I see people constantly who "gamble" in the stock market and if they are lucky they win (and yes sometimes its better to be lucky) :) But when the luck runs out, one will fare better with knowledge about the market that includes a plan for managing their money and their risk.
But the bottom line is its the individuals money and they should do whatever works for them.
jj |
