Money Management For Trading Chaos System

Ever did to watch your capital wiped out right in front of your eye balls and nothing you can do to save the situation? If you did not, well I did! I already came to various of systems (if not thousand of them!), which I can say some were really profitable in a good market condition and it's left the wrong money management which differentiate between profit and margin call. I tell you what, the importance of money management is crucial, and experiencing the margin call will never please you. Learn from my experience.. Sigh!




Asset allocation is one of the toughest jobs for investors. It's the art of minimizing your loss and maximizing your profit. In Trading Chaos 2nd edition book, there is one sub-chapter regarding money management called 'Reverse Pyramiding'. Always ask yourself how much you are willing to risk. I myself, will risk 5% in a good market condition (Wave 3 and 5?), and 3% in risky market condition (Wave 2 and 4?).

This should help you (and me!) with a better understanding what 'Reverse Pyramiding' is.

1. Wiseman 1 = 1 contract.
2. Wiseman 2 = 5 contracts. (Only after W1 is in profit.)
3. Wiseman 3 first signal = 4 contracts.
4. Wiseman 3 second signal = 3 contracts.
5. Wiseman 3 third signal = 2 contracts.

Always remember, preserve the capital is more important than making money. Happy trading! =)