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 27

The Chinese philosophy preaches not good or bad per se, but instead

harmony amongst opposites. For example, characteristics sometimes per-

ceived as bad such as weakness, and a submissive and passive nature

ironically can be an asset in the world of a trader. In the industry, it is

frequently discussed that women are better traders than men. It is their

natural ability to be passive and flow with the market as opposed to be-

ing strong and fighting the market that enables them to generate greater

profits.

Another interesting observation is that yin can be stronger than yang.

When you look at the yin characteristic of water it is in fact considered

stronger than the yang characteristic of fire. This is because water can ex-

tinguish fire and for this reason has greater power. The value of discussing

these philosophies is so that you can look at yourself with greater under-

standing and awareness.

And remember that nothing is entirely black and white. Choose your

perceptions carefully and consider that sometimes perceived weaknesses,

if approached creatively, can be transformed into strengths. It is all in how

you approach these inner qualities and characteristics that will determine

the outcome.

IDENTIFY YOUR CURRENT STRENGTHS

AND WEAKNESSES

So now we want to take a look in the mirror and determine what we cur-

rently see. Don’t identify what was there ten years ago (a few less wrinkles,

perhaps), or what you hope to see tomorrow, but what you see right now.

This exercise of taking inventory will help us later when we are ready to

develop our plan. Check off all the boxes that apply to both your strengths

and weaknesses.

Current Strengths


 Strong computer skills


 Have a current risk plan in place


 Tested trading system in use


 Ability to identify changing market cycles


 Strong analytic skills


 Ability to be disciplined


 Mathematic and accounting skills


 Attention to detail


 Problem-solving skills


 Ability to pull the trigger