Best book on money management?

[Dispassionate]

There seems to be a dearth of good books on money management in trading in particular subject of position sizing. Can anyone recommend a good book that they have read? I can recommend Daryl Guppy's book on Money Management, but I'd like to read more.

 

[nawari]

Money Mngmt Book

There seems to be a dearth of good books on money management in trading in particular subject of position sizing. Can anyone recommend a good book that they have read? I can recommend Daryl Guppy's book on Money Management, but I'd like to read more.

Hi,

You can try Money Management, by Ryan Jones

n Can be downloaded from www.cnotta.com

cheers

 

[Salty Gibbon]

Why on earth would anyone need a book on Money Management ?

It is a very simple concept which is easy to put into practice.

I am not therefore surprised that there are few books on this subject.

A lot of trading books include it or make reference to it and it ususally rates one chapter at the most. You would really have to string it out to write a whole book on it.

IMHO of course.

 

[Rhody Trader]

There seems to be a dearth of good books on money management in trading in particular subject of position sizing. Can anyone recommend a good book that they have read?

Van Tharp's book "Trade Your Way to Financial Freedom" spends a lot of time on position sizing. I think it's gotten mostly good reviews on this site.

A lot of trading books include it or make reference to it and it ususally rates one chapter at the most. You would really have to string it out to write a whole book on it.

I can attest to that. I've just finished writing an introductory book myself and one chapter is about all I could pull together, though I revisited the ideas frequently thereafter by way of reinforcement.

 

[Tuffty]

Salty, Even I could write more than a chapter on it, and although the basic principle may be simple, I think there is more to it than most people think.

Dispassionate, Here's a good page by Ed Seykota on the subject:

www.seykota.com/tribe/risk/index.htm

 

[Salty Gibbon]

Salty, Even I could write more than a chapter on it, and although the basic principle may be simple, I think there is more to it than most people think.

That's the problem with most things Tufty.

Most people think there is more to everything than there actually is.

The really clever people see simplicity in everything.

I certainly do.

 

[SOCRATES]

And Ed Seykota expains it very comprehensively, so there is no need for anyone to add to what he says.
It is very well laid out indeed, and very clear.
Simple. Marvellous.

 

[charliechan]

That's the problem with most things Tufty.

Most people think there is more to everything than there actually is.

The really clever people see simplicity in everything.

I certainly do.

quite.

people say money management when they mean risk management, and risk management when they mean money management. both are second and third places to self management and trade management. if you get the first 2 right, you will have little concern with the latter 2.

 

[Salty Gibbon]

Yes, I do agree CharlieChan.

Self management is paramount.

 

[Anonymous]

Money Management is a very difficult subject, one must read many books to have any understanding of very basic before going on the more advanced areas before knowing what is money management, one has to understand very complex mathematical calculations, after seeing the whole picture with very profound complex mathematical calculations, then applying them to simulated trading practices, can he think of trying them out in simulated practices beyond Monte Carlo simulations. Therefore, before understanding Money Management one should not start trading. That being said, one should not think of a career in trading unless and until and after he has achieved a PhD in mathematics, or statistics or physical mechanics or mechanical physics or statistical mathematics or similar very high level mathematical equivalences, from the right places.

 

[Salty Gibbon]

Anonymous, are you taking the proverbial pi*ss by any chance ?

 

[jimmy1jag]

Anonymous, are you taking the proverbial pi*ss by any chance ?

And after all that guff they still can't calculate and implement a risk policy of 2% of £xxxxx lol.... cos they ain't got no common sense!!!

 

[charliechan]

Money Management is a very difficult subject, one must read many books to have any understanding of very basic before going on the more advanced areas before knowing what is money management, one has to understand very complex mathematical calculations, after seeing the whole picture with very profound complex mathematical calculations, then applying them to simulated trading practices, can he think of trying them out in simulated practices beyond Monte Carlo simulations. Therefore, before understanding Money Management one should not start trading. That being said, one should not think of a career in trading unless and until and after he has achieved a PhD in mathematics, or statistics or physical mechanics or mechanical physics or statistical mathematics or similar very high level mathematical equivalences, from the right places.

well if this isnt extracting the urine, then its a good example of how people confuse money & risk management.

this is all risk management stuff - position sizing is risk management as it determines how much exposure/risk you are controlling (or not in most cases). most people just use an arbitrary 2% and leave it at that, thinking they have it cracked, without realising this may be too much, or way to little depending on other issues. the result is they end up going nowhere, or bleed a slow death - which is better than a fast death until the new guy learns something.

the self directed trader shouldnt run his 1 or 2 positions at a time account like a hedge fund does. this is what we read, but it is not so.

all this phd, monte carlo stuff is just for phd's to create some sort of self value - and a service for banks and brokerages to sell to commercial clients. its usefulness can be limited, and is only there to help clients think they must be doing the right thing because its complex and they paid a load of money for it. ego problem again.

money management is more along the lines of book keeping that any business venture must do. how much money will you keep in your account. will you use margin, how much money you will trade with to meet your daily/weekly objectives etc......

risk management is a sub heading under money management, although its impact is larger than money management which is the source of confusion.

 

[charliechan]

if you want a book on money management - get a simple book on book keeping or something.

how much you should be spending on data etc....

can you really afford that fancy platform if you havent achieved profitablility yet? better go for something else then!

 

[Anonymous]

Example 1, degree graduate brings down bank. Obviously, a common degree is insufficient.

Example 2, professionally qualified person after passing all the stringent exams, tests etc, lost clients' money (not just his own) in casino. Obviously, a professional licence is insufficient.

Example 3, master's degree in business management graduate from the best university in the world brings down listed company using margin or leverage stuff. Obviously, a master's degree from the best university in the world is insufficient.

Therefore, it must be after accomplishing a PhD can one be able to trade profitably.

 

[charliechan]

ex 4. phds and nobel prize winners form hedge fund, but only back test on bull market data (common sense aint so common - even with a phd). they lose 15 billion with their risk mangement and trade management algorithms.

DOH!




ex 5. cockney geezer with 3 cse's brings down uks oldest merchant bank. (just to present a balanced view)

 

[Anonymous]

If that's the case then it must be after a post-PhD that one can trade profitably.

It goes to reason that one should at least have a double first from the right places, and finishing a PhD within 3 years of achieving the double first, and after the post-PhD can one trade profitably.

 

[SOCRATES]

And the book itself remains elusive, because it cannot be written and if it were, and read, it would not be understood. Therefore the measures have to remain as they are, and the onus placed upon the universities to or not to. And that satisfies everyone...perfect.

 

[neil]

Fiver for the pair

Former "barrow boys" are said to have become successful financial traders in the City. So, it seems that no GCSE's and mettalic gonads, a Robin Reliant plus a background in "wheeler dealing" is all one needs to succeed in trading forex, shares etc.

 

[Anonymous]

If someone who has never traded, never experienced nor even heard of the horrendous curse of the "losing streak" were to read a book like a 200 to 400 pages thesis on Money Management, it is still likely he doesn't understand the difference between risking 2% of capital and trading risk-free, after reading and reading the book.