Money Management and Rule Making
Much has been written about money management in the field of trading and investment. Ultimately it boils down to trading in an emotional vacuum and sticking by your predetermined Rules. Remember that trading and investing are two separate and distinct activities requiring an overlapping of but not identical skills. In terms of mindset, there is definitely a full overlap. Having the right mindset will help you to stick to your Rules and apply your stops at the appropriate and preordained times.
It’s common sense not to bet the farm on any single investment decision, and it’s common sense to spread your risk around in a manageable way where you can track your dealings and act fast if necessary.
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