Money Management Principles

money management principles

The Best Top Stocks trading system follows the money management discipline of "The Worlds Greatest Stock Trader" - Jesse Livermore.

Jesse used a money management technique he called his probe system. Determine the full amount of money you are willing to stake for a particular stock. This should be based on a percentage of your speculative portfolio. Livermore learned the hard way that it is best to speculate in stock trading with less than half of available assets. From the assets available for trading Jesse would further split the cash available into various different stocks. Livermore went broke several times because he failed to be strict with this element of discipline.

Livermore began the position by accumulating 20% of the full stake. As the stocks trend and price support moved up Jesse would increase the stock holding by another percentage. Livermore used 20% for the first three positions and 40% to complete the holding.

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