The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

Money Management

Money management involves the apportioning and management of capital,

which involves:

■ (^) Passive Exposure Sizing:
■ (^) Capital sizing
■ (^) Risk sizing
■ (^) Stop sizing
■ (^) Trade sizing
■ (^) Reward sizing
■ (^) Reward‐to‐risk ratio (R/r) sizing
■ (^) Dynamic Exposure Sizing:
■ (^) Maximizing positional exposure
■ (^) Maximizing trend and range profitability
■ (^) Compounding profits
■ (^) Pyramiding positions
■ (^) Managing profit disposals
■ (^) Managing reinvested profits
A trader’s job is two‐fold, namely to:

1. Manage entries and exits


2. Manage risk exposure

The management of entries and exits is probabilistic in nature, whereas the

management of risk is essentially deterministic in nature. This is because it is not

figure 28.1 The Three Elements of a Balanced Trading Approach.