Trading success is about far more than just entries and exits — Position Sizing is one of the key drivers of success and Van Tharp is an authority in this area. Now Van Tharp is absolutely an authority in the area of position sizing. He sets the scene right up front. Position sizing is probably the single most important topic for any trader to get their head across if they want to be sustainable and if they want to meet their trading objectives.
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Trading success is about far more than just entries and exits — Position Sizing is one of the key drivers of success and Van Tharp is an authority in this area. Now Van Tharp is absolutely an authority in the area of position sizing.
He sets the scene right up front. Position sizing is probably the single most important topic for any trader to get their head across if they want to be sustainable and if they want to meet their trading objectives. The real trick is that you have to be absolutely clear on what your trading objectives are, so that you can then take the models that Van gives you and build them into your trading in a way that allows you to meet those objectives. So as always, we start by writing our objectives, being crystal clear on what it is we want to achieve and what we want to avoid in the markets.
Then we take these models that are presented in the book and use them to adjust and customize the way you size each of your positions, how much you risk on each trade in order to really meet those objectives.
The book does a really great job of explaining several different position sizing models that you can use and also a number of position sizing models that you really should avoid. Probably one thing which is missing for me, though, is some concrete tangible examples of how to take those models and build them into different types of trading systems.
One insight that I did get from the book that which was really interesting came from a discussion about which position sizing models we should avoid as traders. When I read this section of the book, it crystallized exactly what the problems were with those models and really gave me a good understanding of what makes a good position sizing model, which put me in a great position for when I went back to the other models which the book advocates, so I could choose the ones that best fit me, that also had the combination of advantages and disadvantages that I really wanted.
This book is absolutely best for people who have already come to the realization that trading successfully is about far more than just entering and exiting the market. Position sizing is about how much you risk on each and every trade and how much risk over all you take to make sure that your portfolio and your trading systems can meet the objectives that you set out for yourself.
I gave this book four out of five. I fully recommend it. Have a read of the free report quickly before you do anything else. Also, please leave me a comment below. In the meantime, bye for now.
Van Tharp's Definitive Guide To Position Sizing
Others work so hard to get themselves a good system, but fail to realize that position sizing strategies are the key to getting what they really want. When you have a great trading system, it is certainly easier to meet your system objectives through your position sizing method; however, you still have a chance to meet your objectives and profit with an average system if you understand how to position size properly. Yes, your position sizing strategy is that important. For many years Dr. Tharp has specialized in helping traders and investors understand position sizing strategies and how to use them effectively. He originally published The Money Management Report as his guide to position sizing methods. While most readers ranked the 1st edition at 10 out of 10, we did get some valuable suggestions which we incorporated.
Definitive Guide to Position Sizing