Discussion of article "Money management in trading"

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New article Money management in trading has been published:

We will look at several new ways of building money management systems and define their main features. Today, there are quite a few money management strategies to fit every taste. We will try to consider several ways to manage money based on different mathematical growth models.

Any method of money management can accelerate the growth of the trading balance, or, in other words, to increase the profitability of the trading strategy. Thus, the trading strategy is the basis, while money management is an addition. Let's see what requirements a trading strategy must meet in order to apply money management to it.

First, it is the mandatory use of stop losses and take profits. With their help, you can control trading risks: stop loss allows you to limit possible losses, and take profit makes it possible to assess the potential profit for each deal.

Second, it is a positive mathematical expectation. It enables traders to evaluate the expected profitability of a trading strategy in the long term, which allows them to make rational decisions and manage their capital more efficiently. However, mathematical expectation is important not only for the trading strategy as a whole, but also for a newly opened position.

Author: Aleksej Poljakov