The Successful Trader's Guide to Money Management

CHAPTER 10Portfolio Management

We're nearing the end of the book, and it's important to explore a field that's definitely one of the most interesting in a trader's work. If you're using a good strategy and applying correct money management principles to the same produces indubitable benefits, the management of significant assets for the range of stocks in your basket is certainly something that gives you a great deal of satisfaction if done correctly.

Portfolio management will assume completely different aspects, depending on the final client it's done for.

If you have your own capital and set up a strategy to manage the same, the development plan can be calibrated to suit your own personality, and the events that characterize the progress of the equity will be monitored with a critical, but above all knowledgeable, eye. Managing your capital and planning your activities to “control” the movements of your assets in a way that's sustainable makes it possible to react in an appropriate way when problems occur. In other words, you'll have a good idea whether the drawdown you're suffering is part of the plan or whether something isn't going according to plan and has broken the mold (probably in a definitive way), and it's better to cut your losses and call it a day.

Managing your own funds makes you personally responsible for the development of the same and, apart from the implications that profits can have on the family (or more probably not making a profit might have) the only ...