Tag Archives: money

An Examination of the Linkages Between Money Management and Trading Goals (English Language)

Dear readers,

I have just released on the blog my first research paper titled: “An Examination of the Linkages Between Money Management and Trading Goals“. This is a summary of my thesis for the Masters of Arts in Finance at National College of Ireland, I have earned in November 2010. I published this work on the SIAT Quaderno, the journal of the Italian Chapter of IFTA (International Federation of Technical Analysts).

An Examination of the Linkages Between Money Management and Trading Goals

An Examination of the Linkages Between Money Management and Trading Goals

Abstract: This paper is a summary of a research study whose objective was to establish a linkage between money management techniques (helping determine “how much” can be risked per trade) and trading goals. Three money management techniques were examined and applied to the profitable “Turtle Soup” trading system. Trading goals were split in three different sub-goals: downside protection, upside potential and an opportunistic outcome. A uni-variate Monte Carlo simulation method was adopted and a trading data distribution calibrated using known goodness-of-fit techniques and tests. The study not only confirms that good money management techniques are able to modify the results of a profitable trading system positively affecting trading performance, but it also demonstrates that, as a result of such capability, money management techniques can be used to control achievement of trading goals. In particular, different features of money management are able to separately affect the achievement of different sub-goals. The paper concludes that a linkage between money management techniques and trading goals exists, therefore selection of the latter is not disjoint from considerations and choices made in the area of the former. This work also offers a generic, re-usable framework to study the impact of money management techniques on trading performance, given any trading system.

Please Notice: Research papers and eBooks are free but only accessible upon registration. If you wish to download this research paper please visit my eBooks & Papers page.

In the eBooks & Papers page you will find all the eBooks and Research papers I have published so far and those I will keep publishing in the future. I am currently working on an eBook focusing on . I like to publish about several topics related to Trading:  Market Analysis, Money Management, Risk Management, Trading Psychology, Trading Methods, Position Sizing, Trading Business Planning, Trading System Evaluation, and a lot more. I try to make available only quality material based on my direct experience in trading and studies in finance in the last 11 years.

Thank you for your interest.

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Filed under English language, Money Management, Research Paper, Trading Goals

Micro Managing an Entry and Current Positions (English Language)

Dear traders,

I took a few trades this afternoon. First of all I decided to add to the current short position. As the market retraced the move lower I closed one of the trades (the one opened at 1.2960) for a small gain (see tweets at 11:10AM this morning), in order to improve entry and position sizing.  I then re-entered at 1.2946 (very close to the exit!) as market started again moving in the direction of the swing trade (short).

Hereunder are the tweets at 11:10AM, 11:34AM and 12:11PM Italian time (GMT+1):

Then I did the actual add, opening another short trade I had, unfortunately, to micro-manage. I attempted the trade before 10AM US time. However, what happened is that the stop-loss I initially use 1.2955 was too smal, as I had not realized the Euro was trading close to a higher, stronger resistance level, all the way half way back from yesterday’s highs at 1.2958. Thus I decided to manage the trade on the smaller timeframe and not respect the initial stop I had selected. Here are my related tweets at 3:51PM, 4:10PM, 4:17PM and 4:29PM Italian time (GMT+1):

I ended up with this position:

SELL 6EZ12 at 1.2929, stop-loss 1.2962, target at 1.2830

and having it a slightly higher risk for this trade, i.e. 1.23% instead of 1%, I adjusted the number of contracts when price came back to entry at 1.2929.

I then moved the stop for the other three trades in the position to 1.2976 and hereunder is my related tweet at 4.21PM Italian time (GMT+1)

I have now targets at 1.2860 and 1.2830 and will bring the short following trades/position over the weekend:

Current Swing Short Position and comments (click to enlarge)

In the weekend I will updated the Model Portfolios Performance with the result of the trade as it develops and will update the list of trades.

Have a great week end.

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Filed under English language, Euro FX setups and trades, Money Management