Money Management

[DionysusToast]

Jam or syrup?

Nope - horizontal.

 

[HowardCohodas]

Nope - horizontal.

And that costs money these days?

 

[DionysusToast]

And that costs money these days?

IT does here.... http://www.poseidon2000.com/EN/services/services.html

 

[HowardCohodas]

IT does here.... http://www.poseidon2000.com/EN/services/services.html

My computer blocked me from viewing that sight. Must be malware of a computer or moral kind.

 

[DionysusToast]

Howard - your computer must be a prude.

I reckon your kids installed "Net Nanny" on the machine so you wouldn't see anything that would induce a coronary.

 

[HowardCohodas]

Howard - your computer must be a prude.

I reckon your kids installed "Net Nanny" on the machine so you wouldn't see anything that would induce a coronary.

 

[AlexLutiera]

When an investor earns money, he must know how to manage it.
According to wikipedia.org, the definition of money management is:

Money management is the process of managing money. It includes investment, budgeting, banking and taxes. It is also called investment management.
Money management is a strategic technique employed at making money yield the highest of interest-yielding value for any amount of it spent. Spending money to provide answers to all cravings (regardless of whether they are justifiable or not to be included in budget basket) is a natural human phenomenon. The idea of money management techniques is developed to plummet the amount individual, firm and institutions spends on items that add no significant value to its living standard, long-term portfolios and asset-basins. Warren Buffett, in one of his documentaries, admonished prospective investors to embrace his highly-esteemed "frugality" ideology. This is the basis of every sound money management formulas. The following are powerful techniques that can be employed in making every expense made to be worth it:
1. cutting your budget on social needs
2. avoid any snob-appealing expense
3. always go for the most cost-effective alternative (establishing small quality-variance bench-mark, if any)
4. increase expenses more on interest bearing item than any other thing
5. establish the expected benefits of every desired expense using the canon of plus/minus/nil to standard of living value system.
These techniques are investment-boosting and portfolio-multiplying.
Money management is used in Investment management and deals with the question of how much risk a decision maker should take in situations where uncertainty is present. More precisely what percentage or what part of the decision maker's wealth should be put into risk in order to maximize the decision maker's utility function.
Money management gives practical advice among others for gambling and for stock trading as well.
Money management can mean gaining greater control over outgoings and incomings, both in personal and business perspective. Greater money management can be achieved by establishing budgets and analysing costs and income etc.

-----Asa trader, stockholder, investor, or any other financial experts, you must know the keys: BUDGET, BANKING, CONTROLLING, INVESTING.

 

[barjon]

So why all this fixation on money then?

I know the initial position size I am prepared to work with. Thereafter it's all about what's happening to price and it's a total and counterproductive diversion (for me anyway) to be constantly looking at how much money I'm losing or making ... in fact I exclude that information from my trading platform so I can't see it. Not easy to exclude such thoughts, of course, but I try.

good trading

jon

 

[JourneyFX]

What is it?

More importantly, what's NOT money management. Money management is certainly not pyramiding losses, that's for certain. It is not guessing about how much or how little to execute on any given order, that much is also certain. Money management is absolutely not guessing about what direction to enter the market, nor is money management a guess about when to exit the market.

Money management is solely dependent upon realized risk and risk is dependent upon the level of precision with which the trader has managed to attain on a consistent basis. If the trader has little to no precision upon exiting their position, then risk will be realized as being very high, followed by all manner of rationalization and philosophical statements about how so few will actually become profitable traders over the long haul. If the trader has developed a level of good precision upon existing their position, then risk will be effectively realized as low, followed by an understanding that with appropriate analysis of the market, long-term consistency as a trader is most definitely attainable.

So, as it turns out, money management is hugely psychological and dependent on the track record of success or failure of the trader. That's the reality behind the banter about money management.

In the dark Whistling away, no doubt. :whistling

 

[Joey25]

A formal interpretation of "money management":

An asset (which in our trading context will typically be the returns on another asset conditioned by some trading rule) has an expected daily return (%) and a daily variance (%-squared).

Consider two such assets, X and Y. The expected daily return on X is E(X) and the expected daily return on Y is E(Y).

Apply weights of a to X and b to Y to the above such that they add to 1 (i.e allocate 100% of wealth between them).

Then the job of money management is to allocate the weights such that portfolio variance is minimised subject to a target expected return.

Expected return is given by E(P) = aE(X) + bE(Y)
Variance is given by Var(aX + bY) = a^2Var(X) + 2abCov(X,Y) + b^2Var(Y)

The method of Lagrange is used to compute the optimal weights.

 

[Michael Brown]

My I always remember to plan 3 important points before I enter a trade:

The entry point
The projected target point &
The stop loss point.

These 3 points give me a clear idea if the trade is worth entering into keeping in mind that technical analysis is based on human psychological patterns. If the risk/reward ratio (calculated from the three points above) does not seem worth it to most other technical traders, the buy situation will probably fail.

 

[Harry Sanborne]

Who has the BEST chance of success A or B or C or D? All players have £1,000/ $1,000 in account.

A. Short on DOW with Stop Loss at 25% account risk.

B. Short on FOREX with stop Loss at 25% account risk .

C. Short on GOLD with Stop Loss at 25% account risk.

D. Short PUT/CALL DOTM on OIL with Stop Loss at 25% account risk.

Please place in order of choice on all 4. [ Leave out "D" if you are not sure on options.
========================================


Who is more likely to go bust FIRST if they continue the strategy with same % on stop loss A, B or C or D?

Please place in order of choice on all 4 or on 3

 

[Johnkarner]

This is your right to select your way to save and invest your money in any business . Real estate is a best way to investment of money and earning .