Matching Money Management With Trade Risk by Daryl Guppy
Manage your trades using technical analysis by identifying risk points as well as setting profit objectives. This Australia-based author shares some of his favorite techniques.
Most of us think trading is a rational process, but many private traders approach trading the same way that other people approach a wishing well. Those people throw money into the well, make a wish and wait for
their wish to come true. In the same vein, some private traders throw money into the market and all they wish for is a profit. Sometimes the wish comes true, but most times, just like a wishing well, it is a waste of money and time. For traders using the market as a substitute for a wishing well, trading is a very emotional experience.
With that in mind, letís take a closer look at the way emotion interferes with good trading and at some of the ways that chart analysis can help us establish trading objectives more effectively.