Stocks & Commodities V. 23:8 (65-68): Product Review: Market System Analyzer by David Penn
Writing about money management in his book "Come Into My Trading Room," trader, author, and trading educator Alexander Elder suggests that:
Successful trading is based on 3 Mís: Mind, Method, and Money. Mind is trading psychology. Method is market analysis, and Money refers to risk management.
This last M is your ultimate key to success. The slope of your equity curve, which you must draw as part of your money management process, reflects the state of your mind as well as the quality of your method.
Even for those who know that money management means more than just utilizing stop-losses, it is no secret that money management is the least attractive
part of the traderís game. Analysis may get tedious and trading itself might be frustrating, but the upside from successfully conducting both is obvious and readily apparent: your analysis tells you a stock will go up and it does, your method tells you to take a position and you exit with a profit. Nothing to complain about there.