The Successful Trader's Guide to Money Management

APPENDIX IVOnline Trading

IV.1 The Trader

We've discussed the risks associated with trading, how to try to avoid the worst‐case scenarios, and concentrated on various techniques that can be used to effectively size a position. All of the above are made up of a certain dose of science, while attempting to juggle the figures to avoid being overwhelmed.

But the risks don't end there. Learning the notions in this book isn't enough to trade lightheartedly on the markets; there are other perils to watch out for.

Figure AIV.1 shows an example of the risks in the trading world.

First and foremost, one might ask, what is trading really? Someone who's new to this world will often have the wrong idea after watching a film, reading an article, or perhaps end up falling prey to misleading advertising.

In terms of films, I must say the characters portrayed, while it's true they may certainly exist, are nothing like this trader or many others I know.

The greedy, unscrupulous banker, always wearing braces and chewing on a huge cigar, belongs to a different world than the reality we live in on a daily basis. Anyone who starts trading on the stock exchange with the idea of one day becoming that sort of character, perhaps looking for the same sort of power to wield, would do better to choose another career. They'd probably get as far as buying a pair of red braces to hold up their pants.

So, all intentions of becoming the next Gordon Gekko aside, the aspiring trader does, however, have to take ...