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Money Management
The most important aspect to your trading, is money management.  
Money management is that portion of one's trading system that tells you how many units (position size) of your investment should you put on a given trade. How much risk should you be willing to take?  

Each and every day thousands of money management experts go to work to give you their expert opinions on how to best invest your money.  There are tons of money managers out there, from full service brokers with excellent executions, to mutual and hedge fund managers with the most up to date research information. The end result is simply information overload.

Emulating money managers such as Warren Buffet, Peter Lynch or any other investment guru by reading their strategies is a hopeless task, simply because the real reason for their success, money management, is rarely discussed. Yes, we all know that Buffet is a value player, but so are millions of other value investors, so why are they not as successful?

The truth of the matter is that very few money management experts truly understand the science of money management.  Walk into any broker or investment advisor and have a meeting.  You will find that the whole process is simply geared toward putting you at ease, or, as one broker once told me, "We are not in the financial business; we are in the relationship business."

9 times out of 10, you will end up leaving your money with the guy that makes you feel the most secure, and not the guy who is truly the most qualified. The same mistake is often repeated by most investors who often buy supposedly safe stocks recommended by analysts, as opposed to buying stocks that truly have the most potential.

It took me 13 years to deprogram my mind from the constant barrage of Wall Street's misguided expertise that on the surface seemed logical, but worked against me in real investing.  If you want to be successful, you too have to deprogram and take control over your own finances.  

I have messed up an incredible number of trading opportunities by not following proper money management routines.  In the end, it was all Murphy's Law in action. The stocks I was sure about hurt me the most, and the stocks I was afraid of went up through the roof. Sound familiar?  Today through the use of my Strategy, I simulate a mutual fund in my own personal portfolio.  I don't look to make a fortune on one pick, but I don't lose big either; it's my overall portfolio's growth, and ability to sleep at night that makes me successful.  That's good money management. 

Position sizing and buying at the wrong time will be your biggest mistakes.  Buy 1,000 shares of a stock and watch it go down the next day. By the time your stock would come back up, you will be a much humbler rabbit, ready to sell just to break even. Then several days later, the stock is 10 points higher, but you are already out of the game.

Instead of investing aggressively, GetFolio subscribers practice good money management, slowly building positions in stocks in small increments. Our risk in each stock is drastically reduced, and we have what it takes to stay the course.  Instead of taking major positions in each stock, we spread ourselves across a variety of stocks using multiple small buys. Less risk, and great returns. 

Most traders lose money for the same reasons.  Are you one of them?

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