Money Management Strategies for Futures Traders
Distills complex theories for the benefit of the average trader with little or no background in finance or mathematics by offering a wide range of valuable, practical strategies for limiting risk, avoiding catastrophic losses and managing the futures portfolio to maximize profits. Numerous topics are explored including: why most traders lose at the futures game most of the time; why most mechanical trading systems are apt to fail; the probabilistic approach to trading; how to make stop-loss orders work for, rather than against you; the pros and cons of options versus futures trading; and how to limit risk through diversification.
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Understanding the Money Management Process
The Dynamics of Ruin
Estimating Risk and Reward
Limiting Risk through Diversification
Managing Unrealized Profits and Losses
The Role of Mechanical Trading Systems
Back to the Basics
Appendix A Turbo Pascal 4 0 Program to Compute
Dollar Risk Tables for 24 Commodities
Appendix E Analysis of Opening Prices for 24 Commodities
1980 through June 500 Stock Index Analysis of Opening anti-Martingale Assume assured unrealized profits average true range Based on price Based on weekly British pound cents Contracts Percent Tick Correlation Coefficient 1983-88 Crude oil Daily Data Weekly daily true ranges Data Total Obs Data Weekly Data Deutsche mark Difference in Ticks'1 directional movement index Dollar Risk Table entry price Eurodollar example expected returns exposure fraction futures contract Gold COMEX investment Japanese yen losing trade Max Dollar Risk Minimum price fluctuation number of contracts NYSE Composite Index opening price option payoff ratio Percent of Daily Periods Difference permissible risk probability of success risk capital allocation risk of ruin Sharpe ratio Silver COMEX Soybean oil stop price stop-loss order strategy Sugar world Swiss franc Ticks H trading system Treasury bills Treasury bonds trend unrealized loss variance volatility Weekly Data Total weekly true ranges Weeks Range Wheat Chicago Wheat Kansas City