I finally got around to reading about the blowup of Amaranth Advisors hedge fund. I’m astounded that some of these supposedly sophisticated hedge funds apparently have no clue about such basic concepts like money management, position sizing and ‘risk of ruin‘. The disaster at this fund is a great illustration of why I’ve […]

There seems to be a lot of controversial over the concept of R-Multiples. I’ve been seeing people complain about them for months now and I’ve been meaning to write a post about “R”. I really wanted to do it last week but I’m glad I didn’t get to it because this week a […]

Here are my responses to the comments left on last week’s “position sizing considerations” post:
nonadamas wrote:
1. What about equipment, ISP failures, do you always write down your trades?
2. What kind of backup set-up do you have?
3. Brokerage problems, problems at their site or with their people making errors?
When I started active trading, […]

I want to share & expand upon the answer I gave to an email about position sizing the other day. Justin wrote:
[SNIP] After reading your article on 100 R i can now see that it would benefit me to daytrade and use 1 R per trade instead of my old 2 R per trade […]

The other day Marcos asked where he could find a position sizing spreadsheet. I just uploaded mine in case anybody else wanted a copy. It’s nothing fancy at all and it’s based on the percent risk position sizing model. Just enter your account equity and the amount you want to risk per […]

What a coincidence (do coincidences actually exist???) that just as I’ve been thinking more about money management Worden has had a run of users writing in about money management. Here are some of those letters which were published in the Worden Report (emphasis & links added by yours truly):

Tags: 80/20_Rule, Exits, Expectancy, Kelly-Criterion, Money Management, […]

I’ve been doing a lot of thinking about money management and compounding of late. The other day I realized that I’d accumulated over 100 R of profits since I began day trading. (1 R = my initial dollar risk on any given trade.) More specifically it’s 100 R from when I started […]

Position sizing could very well be the most important aspect of a trading system, yet, like expectancy, it’s rarely covered in trading books. A position sizing model simply tells you ‘how much’ or ‘how big’ of a position to take. Position sizing can be the key factor in whether or not you stay […]

Here’s an article by Adam Hamilton about how to speculate successfully. It covers what should be familiar topics — money management, position sizing, trailing stops and expecting the unexpected. Here’s a snippet:
This week I would like to discuss tactics that speculators can use to survive and thrive in a limitless environment. The markets […]

The other day I noticed the TheStreet.com has published some of Gary B. Smith’s articles on the free section of their site. I may have to start visiting the site again on a regular basis. Here are several of the articles that I found interesting.

Getting From There to Here, Reprise - Gary talks […]