Chapter 23. Money and Risk Management
Chapter Objectives
After reading this chapter, you should be familiar with
Definitions and measurements of risk as it relates to money management
The martingale betting strategy
Diversifiable versus correlated risk
Methods for testing money management strategies
The use of various types of stops to manage risk
Methods for determining the minimum capital needed for a system
Methods for determining the percentage of capital to allocate toward one system
“They [great traders] have all been humbled by the market early on in their careers. This creates a definite respect for Mr. Market. Until one has this respect indelibly engraved in their (sic) makeup, the concept of money management and discipline will never be treated ...
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