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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Matthew L. Jones who wrote (3902)9/13/1999 6:32:00 PM
From: Eric P  Read Replies (2) of 18137
 
Matt:

Sorry to hear that your play in GIC this morning did not turn out better.

However, I firmly believe that successful trading must begin with rigid MONEY MANAGEMENT. However, the money management constraints DO NOT determine your stop loss points, => You do. You decide on the stop loss points based on your view of the stock, and use money management concerns to limit your total number of shares, when necessary for stocks needing wide stops.

Granted, the magic 2% 'rule' is somewhat arbitrary in my opinion. If we change the 2% stop loss to 4%, then traders will still find that on occasion their stops take them out of a position at the exact wrong time. Unfortunately, it's unavoidable. In the long run though, money management is a winner. Or, as Martha Stewart would say "It's a very good thing." <smile>

Good luck tomorrow,
-Eric
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