This is a vital skill which traders have to learn in order to manage their trading capital effectively and continue to trade.

Risk is also considered in detail. Whole books have been written on this subject as it is a very important concept to grasp. Most trading decisions are weighed up on a risk/return basis.

If you don’t understand risk, you will not maximise your returns.
 
Money management is the key to better trading. The methods applied by institutions, banks and mutual funds do not work effectively for smaller trading and investment accounts. When we trade with a account size of $50,000, or $100,000, or $500,000 we need to apply different money management strategies. Better Trading presents and compares a number of these strategies. They are all linked to Excel spreadsheets which are available as the Better Trading pak.

"If 100 people intend to start trading, only 20 will succeed and survive - the rest are long-term investors'... Daryl Guppy

Part 1 – PERFORMANCE PROFILING

This section considers how money management is able to improve trading results without changes in trading skills. By understanding how to develop a personal trading profile and apply equity curves the trader has a firm foundation on which to apply appropriate money management strategies.

Part 2 – PROTECT CAPITAL

Experienced traders start every trade by protecting capital. Understanding the nature of trading risk is the first step in managing risk and uncertainty. This section examines the reasons why traders fail to execute stop loss conditions and provides solutions to improve stop loss effectiveness. Money management is used to protect capital. Strategies compared include Zero Cost Averaging and Dollar Cost Averaging.

Part 3 - PROTECT PROFITS

Captured profits make a portfolio grow. Done effectively this minimises trading risk and leverages successful trades into substantial winners. We compare competing strategies designed to minimise risk and grow profits. We show how the most effective Grow_Up strategy is used to match the changing nature of risk as the trend develops. The section concludes with specific strategies for using the ASX rules to improve your chances of buying and selling at your preferred price.

Part 4 – PROTECT PORTFOLIOS

No trade is an island. They are part of a portfolio and portfolio performance is measured differently from trade performance. We show how to set effective and truthful benchmarks for performance. We examine the impact of diversity and show how real diversity is achieved so that portfolio risk is reduced. Swiss Roll and Active Investing investment strategies are examined. They capture profits while lowering risk. They also provide portfolio trigger points for individual trade management.