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(MT) $2000 A Day With A $50 Trading Float - What is the Holy Grail of Trading

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Article Body:

Like the Knights of the Round Table, novice traders often search diligently 
to find their own Holy Grail, the perfect indicator(s) that will lead them to 
fabulous trading successes. It is the silver bullet that will slay the market 
for them. But, searching for this elusive Holy Grail will only waste hours upon 
hours of your valuable time and nobody will write legends about you. The truth 
of the matter is that no trading system will pick winning trades one hundred 
percent of the time.
Save your time and your money. I can tell you right now, that no such perfect 
indicator exists. It does not exist today, it never did, and it never will.
New traders search for their Holy Grail because they get a sense of control 
when they use entry signals to open their positions. They want the point they 
choose to enter the market to be the point at which the market is doing exactly 
what they want it to do. If they can find this point, a novice trader will often 
feel like they have some sort of control, not just over the entry, but also over 
the market. Unfortunately, there is never a time when a trader has control of 
the market.
Once you are in a position in the market, the market is going to do whatever 
it wants to do. No one can control the direction of the market, or the extent of 
its movements. There is only one component of your trading system that you do 
have control over, your money management. Here is the true Holy Grail of 
trading.
In fact, Van K. Tharp, PhD, a world renowned leader in the unique area of 
professional trading says that 'Perhaps the greatest secret to top trading and 
investing success is appropriate money management.' 
Money management is a 'secret' because few people seem to understand it, 
including many people who have written books on the topic. Some people call it 
risk control, others call it diversification, and still others call it how to 
'wisely' invest your money. However, the money management formula that is the 
key to top trading and investing is often simply referred to as the algorithm. 

An algorithm simply will tell you, 'how much with respect to any particular 
position in the market', (Van K. Tharp, PhD Special Report on Money Management 
(1997) using a step by step problem solving procedure. This is a time honoured, 
recursive computational technique for solving a dilemma in a predetermined 
number of steps. 
Yet, 'Despite its importance, money management still remains relatively 
unknown by many traders and investors around the world.' Van K. Tharp, PhD.
Money management rules include defining your trading float, setting your 
maximum loss, calculating your stop loss, and most importantly learning how to 
choose your position size. Once these rules are in place in your system it's 
important to follow them. They are a critical part of any effective trading 
system. Money Management rules are the Holy Grail, the magical object that will 
bring you success in the market.

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