The importance of money management

14 Feb 2022

The one important thing from this that I want everyone trading to know is that if traders make money quickly with bad behavior, they mostly lose it just as quickly. Money management, which most don’t focus on, is exponentially more important than buy/sell signals & strategies.

In the last 20yrs, I haven’t seen anyone who has kept profits from trading without good risk management. I know many who’ve lost quickly. The fastest was a client, who turned Rs 1lk to Rs 2 cr in 2 days buying deep OTM puts in 2008 but gave it all back in the next 12 months.

There is no quick money that can be made & kept. The most important aspect of trading is to never be in a situation where a trade can cause more than a 1 to 5% loss of capital. Lesser the better. That is when greed & fear will lead to the least stupidity as well.

View on Twitter →