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There are some common mistakes I’ve seen traders make
in the area of money management. First, let’s understand what money
management is all about. Money management overlaps with risk, trade,
business, and personal management, yet it has many aspects that make
it unique, distinctly different from all of the other areas of
management. In this chapter we want to examine some areas of money
management that seem to involve mental quirks leading to costly
mistakes.
It is important
to note that the Technical Analysis Overview provided does not
attempt to be a comprehensive treatment of Charting or
Technical Analysis methods. There are numerous, well-written
books on Chart Interpretation and Technical Analysis. A brief
and simplistic review of some basic charting concepts are
provided for reference or to stimulate further study. Please
contact your broker for a recommended reading list on Charting
and Technical Analysis.
The Laws of Charts
Great Ebook,
explains in details al types of charts used in technical analysis, from the ebook: A typical 1-2-3 high is formed at the end of an
up-trending market. Typically, prices will make a final high (1),
proceed downward to point (2) where an upward correction begins;
then proceed upward to a point where they resume a downward
movement, thereby creating the pivot (3). There can be more than one
bar in the movement from point 1 to point 2, and again from point 2
to point 3. There must be a full correction before points 2 or 3 can
be defined.
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