Dr.Lo

In my opinion, and also the opinions of many more experienced traders than myself, there are a few "must read" books: Trade Your Way to Financial Freedom and Financial Freedom Through Electronic Day Trading and The Definitive Guide to Position Sizing, all 3 by Van Tharp; the Market Wizards series of books (3) by Jack Schwager, and some good books on technical analysis (John Murphy and Martin Pring are often recommended). My personal recommendation is Barry Burns / TopDogTrading.com, I love his clarity and objectivity. All the best, Eliot

Thank you, Waveslider, for your kind acknowledgment! I appreciate knowing that 'someone is out there', if you know what I mean. After your response, I remembered that Dr. Tharp offers a FREE position sizing trading simulator for three levels of difficulty (for the higher levels of difficulty, he charges around $200, but one is under NO obligation to purchase the full game) which can be found at: http://www.iitm.com/products/Trading-game.htm In my opinion, when you can consistently kick ass at the first three levels, you've gotten the basic idea pretty well. The key word there is "consistently", NOT "kick ass" (Van has commented on some of the winners of trading championships having fantastic luck, and the statistical probability of using those same position sizing algorithms with success on large samples being practically nonexistent. Remember, in large sample size, streaks of multiple winners and losers WILL OCCUR, and one's system will collapse if bet size is not small enough to survive those streaks). I should probably state for the record, in the spirit of full disclosure, that while I have personally purchased many of Dr. Tharp's products and services, I have NO financial ties with him or his excellent organization, the International Institute of Trading Mastery (I.I.T.M.). Playing the free game enough times should clearly reveal the biases and limitations of many types of inadequately thought-through position sizing algorithms. Martingale systems, in particular, can ONLY work under the boundary conditions of 1. your goal is a (typically) $1 win per series of bets 2. you have an UNLIMITED bankroll and 3. your counter-party will allow an unlimited number of bet size doubling. While it may have some purely theoretical validity, it has consistently failed miserably in the real world, in both gambling and trading. This quote sums it up best, to me: "In theory, theory and practice are the same. In practice, they aren't" Yogi Berra. LOL!!! All the best!

Van Tharp wrote "THE" book on position sizing, in which he does an in-depth analysis (lots of tables, charts and statistics) of Martingale, anti-Martingale, Kelly criterion, optimal f, and many other types of position sizing algorithms (93 different ones, total). It's called "Van Tharp's DEFINITIVE GUIDE TO POSITION SIZING". It also covers essential information about mental errors, biases, fallacies, and costly mistakes to avoid. It's big (380 pages), and it's not cheap (around $150-200 US). He also has a two dvd set that covers the essential "meat" of the book, but of course leaves out much of the detail. I love the way his mind works (the contextual perspective that is relatively unattached to any specific content, which he got from his training in neuro-linguistic programming, and working with thousands of traders with vastly different beliefs and methodologies, plus he's a Ph.D. shrink), even though I might not personally agree with all of his beliefs, but in this specific area, I haven't yet seen anyone in or near his class. Just my two cents, and I could be wrong - it's happened before, and it probably will happen again - LOL! (trader humor, we all have losing trades, don't we?) What's the bottom line? Just like practically all of the great traders profiled in the Market Wizards series say, "You've got to find what works for you". In my opinion, this applies equally to method, technique, time-frame, markets, psychology and position sizing. Position sizing in particular must be approached with an understanding of personal, individual risk tolerance and risk aversion, and account size and our own objectives are also vital considerations and unique elements of a successful total trading plan. For people who want a "just do this" answer, look elsewhere; for those who want a broad understanding within which to find themselves and meet their goals, you might just end up loving Van Tharp as much as I do.