A trader\'s money management system

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c03 JWBK182-McDowell April 25, 2008 15:41 Printer: Yet to come

Yin and Yang 25

FIGURE 3.1 Chinese Yin and Yang Symbol Illustrating Opposites in Harmony

This means that there must be harmony and balance in your approach

in order to be consistently successful. For example, excessive joy over

a win or excessive anger over a loss will not be beneficial to your fi-

nancial outcome. Rather, an even keel—a balanced emotional attitude

where all your opposites are in harmony—will create the best financial

bottom line.

For example, when I had two trades that created huge monetary losses

for me many years ago, it seemed like that was the worst thing that could

happen. I was angry at myself for sure. But, just as in the Chinese philos-

ophy, that dark moment created the seed for a bright future that included

the sound money management that I use to this day. Now that I have dis-

tance from those losses, I can see objectively that they were the catalyst

that created a plan that generates far more monetary gains in the here and

now. My perception of the early losses has changed.

Take a look at Table 3.1. What I want you to see is that there are

many opposites in this world that live in harmony. Dark, light; weakness,

strength; downward, upward; bear market, bull market; these opposites

all coexist and operate together. It is as if without one of them, the other

would not exist.

My point in providing this list of yin and yang is for you to see that

you need not fear your weaknesses. And, just as important, you need not