Chapter 23. Money and Portfolio 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 ...
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