Table of Contents

Foreword vii

Preface ix

Acknowledgments xi

Diclaimer xiii

Introduction This is My Money Management System 1

Part One Psychology of Risk Control 7

Chapter 1 It Just Ain’t Sexy! 9

Chapter 2 Confidence in Your Plan 15

Chapter 3 Yin and Yang 23

Chapter 4 Risk Psychology and The Trader’s Mindset 31

Part Two Stop-Loss Exits 37

Chapter 5 Not Every Trade Will be a Winner 39

Chapter 6 Entry Rules and Your Trading System 45

Chapter 7 Stop-Loss Exit Rules 55

Chapter 8 Scaling Out and Scaling In 65

Part Three Trade Size Does Matter 73

Chapter 9 Using Risk-of-Ruin Tables and the Optimal f Formula 75

Chapter 10 Using the Two Percent Risk Formula and Proper Trade Size Formula 83

Part Four Record Keeping and Profit/Loss Analysis 89

Chapter 11 Tracking Profit and Loss Results and More Formulas for Success 91

Chapter 12 Using Trade Posting Cards and Ledgers 99

Part Five Design Your Own Plan 131

Chapter 13 Know Thyself—Your Risk Profile and Discipline Profile 133

Chapter 14 Risk Management Rules to Choose From 139

Epilogue 149

Appendix A Getting Started with Your Trade Size Calculator Software 151

Appendix B The Trader’s Assistant Record Keeping System 153

Appendix C The Art of Paper Trading 167

Appendix D Resources 173

Glossary 179

About the Author 203

Index 205

About the Author

BENNETT A. MCDOWELL is the founder of TradersCoach.com® and an expert in technical analysis and complex trading platforms. Earlier in his career as a financial advisor, McDowell used his own proprietary trading system to serve a community of high-net-worth clients. This system is now known as Applied Reality Trading®, or ART®, and is used by traders around the world in over forty countries. McDowell lectures nationally and writes articles for many leading trading publications, including Technical Analysis of Stocks & Commodities magazine. He is a recognized leader in trading education and is honored to be included as a member of the eSignal "Trading with the Masters" team. McDowell is also author of The ART® of Trading, which is published by Wiley.