there are alot of ways to think about "money managment." *unfortunately, most of what is published is in my opinion just flat out bad advice for small accounts. Guys read "risk 1% per trade" then think that is a good idea with 10k, then set up their tight stops, and start moving from losing trade to losing trade, hoping that they will hit that "big winner" soon. this is called the "professional" approach to trading, and a tyro who has a bit of knowledge but little experience believes it. *An analogy would be a short stack who is playing tight hoping to get that big hand... but, the odds are he will lose it to blinds before getting that chance to take a stand. *the conservative small player will likely not lose, or lose much, but will not make much either. It is a path to frusteration. Perhaps a great strategy for the hobbiest but not great for making money. *Then u have the people who simulate backtests making an "optimal" betting fraction. Well, yes, that is nice to know, but it is hindsight thinking usually tested on an overoptimized system, with too much hope for future being like the past. *I would suggest that new traders limmit risk not by risking a teeny % of account but rather by only funding the account with real risk capital. If that is the case, Then, you should be willing to put it all in one or two stocks. as the account grows, then diversify with the new money. If you don't have a decent stake, learn how to make money by other means, and save up. *How many dream of being one of the "real" traders but then learn a method or read a book on "money management" and learn a lesson that will almost certainly confine them to a trading life moving from one scared trade to the next. *Every trader I have known who has succeeded with his real capital was a real risk taker. He didn't think of his trading as just a "job" or to "minimize equity fluctuation" or to "make a bit each week" but rather wanted to maximize potential and was focused on making it, aggressiveness, not fear. * The way to succeed with conservative strategies is to make a good program then go out and SELL SELL SELL it so you can get enough equity to make it work, then collect fees. That is a good model for creating a business with relatively steady cash flows, yet depending on ability, huge upside potential. *If one wants to be a real player with own money, and make it from scratch, you have to be a risk taker. *I always know someone with little chance to succeed when u see them attack and belittle a trader who has "gone over the edge" how funny, well, when u put yourself out there and really "go" for it, really do all that is required to make x million from a small amout, failure or steep falls are a real possibility. The goal focused person moves beyond and is invigorated by challenge and knows he never would have made x million without the risk that has set him back, if and when it occurs. * the advantage one gains is more important than money management. those who say money managment is first, are insane and not thinking properly, one cannot put the cart before the horse. losing slowly is still losing. in fact it is worse, in my opinion, due to oportunity cost. *Survival and compounding returns while attempting to stay within the personal "uncle" point are what money management it about. all the one line bromides, in the end mislead and cause much trading losses, bleeding, frusteration.
Kelly sizing -- as opposed to that "fixed fraction" crap -- is real-time-optimal, not post-optimal. Those who say something can't be done should stay out of the way of those who are doing it.
It's not a matter "can't be done" It's a matter of rationality. It's Statistics 101... Find and read about St. Petersburg paradox... you'll get the point. If you still want to debate, please run some (valid) tests to prove it.
I can't compete with these geniuses on here, but I'll let you know the money management system that has worked for me for the past 18 months. I started with roughly $30K, trading 2-3 positions at once, $5K per position. Goal is always 10% per month. I swing trade mostly, and I'm in and out in one to five days usually. Pivot points and support and resistance determine my profits and stops, but stops are NEVER more than 5%. How I pick the stocks is for another day. If I make my 10%, I up the position size for the next month. $5500, $6050, $6655, etc. If I don't make my 10%, I leave it for another month until I do. I've only missed 10% five of the 18 months. I've hit my 5% stop plenty of times, but I don't go "on tilt" when I do. Sticking with the plan - that's the hardest thing to conquer. I'm doing pretty well with it. Go ahead, mathmagicians, rip it up.
I'm sorry, Mr. "Neet," were you referring to me? Like I'm going to answer you now. Look at the title of the thread and go pick your own stock.