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Technical Analysis: The Complete Resource for Financial Market Technicians, Third Edition by Julie R. Dahlquist, Charles D. Kirkpatrick II

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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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