I suppose I wasn't all too clear. I agree a garbage system is still garbage regardless of the money management scheme. How do you define "positive expectancy?" Many great systems edge is derived from a money management plan that creates the positive expectancy.
P.S. I'd suggest reading the book if you'd like to learn more about the approach.
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Usualy wannabe traders that dont have an edge, their entry is based on a crystal ball/reading stars/moon location etc. and have no exit plan in place, will tell you that the most important part is the Money Managment.
Have a good entry, statisticly expected profit per the time frame you trade and you are OK.
Floor traders do not manage, they see the right reason to buy/sell, get in and get out with profit. Just do it many times a day and leave the Managment to the managers.
How long you want to be expose to the market?
Do you want to reduce the exposure and have reasonable profit per trade that pay for the risk you take?
So lets say you trade of a 5 range chart TF. If you open the chart you can see that most moves/waves will generate around 10-12 ticks. This becom the expected profit.
Now see how long /bars did the move usuasly takes. Is it 4-8 bars? so this become the time that you expect to make your profit.
Now, find yourself a setup/trigger to identify the start of those moves, set your profit target to a few ticks less and start trading. If you see that there are 5-8 such moves a day, again, this is how many trades you can expect to trade a day.
expectancy is key for me as well. money management is just common sense (something like not trading 10 es contracts with a $5,000 account), but no real value for day trading. good explanation about expectancy you can find in dr. van k. tharpís book: trade your way to financial freedom.
one thing I can't agree is about the floor traders. I would go as far as saying most of them are losing money. the big boys are sitting in front of computers in offices now. and the floor traders and the pit itself are nothing more than a tourist attraction.
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