文档介绍：Week 1: Money Management
How much do you know about Money Management?
As we begin the course, I thought it would be fun and informative to start this
week's topic with a short quiz. The purpose of this is to help you to evaluate
your strengths and weaknesses so that you know exactly what issues you have
to concentrate the most on. Are you ready? Let's go!
Begin the quiz
1. It's important to use a stop-loss the vast majority of the time. But
there are certain market conditions under which you should not use a
stop-loss. Which of the following are they:
a) Immediately after I've entered a trade
b) A highly volatile market
c) Runaway markets
d) All of the above
e) None of the above
The correct answer is: e) None of the above.
You should use stop-losses no matter what.
Find out why in Rules 1, 2, 4, 5, and 6.
2. If I made a series of bad trades and my account losses 70% of its
value, I have to show a return of how much before I get back to break-
even?
a) 45%
b) 70%
c) 140%
d) 230%
The correct answer is: d) 230%
Large losses can have a devastating affect on your recovery ability.
That's why it's important to never have them in the first place.
Find out more about this in Rules 1, 2, 4, 5, and 6.
3. True or False: If a trading strategy has earned an average annual
return of 120%, it's average maximum drawdown is irrelevant because
no matter how large it is, the strategy will always make up for it.
The correct answer is: False.
Drawdown is always important and can affect your profit potential
dramatically no matter what the "average total return" is.
Find out more about this in Rules 1, 2, and 3.
4. The world's most essful traders do which of the following most
often:
a) Buy at market bottoms and sell at market tops
b) Trade in the direction of trends of the strongest or weakest
markets
The correct answer is: b). The world's most essful traders trade in
the direction of trends in the str