WD Gann & Money Management

["David Pearson" <DHPearson@xxxxxxxxxxxxxxx>]

This is a follow up to my "WD Gann Forecast - Major decline ahead post".  It 
occurs to me that I didn't mention money management.

There may be many of you out there who don't understand the importance of risk 
management.

Money Management and risk management are the most important aspects to 
successful trading.  Mr. Gann always used protective stop orders incase his 
was wrong.  He never risked more than 10% of risk capital on any trade.  Mr. 
Gann had a high degree of confidence in his methodolgy and was right in his 
expectation a high percentage of the time.  None the less, he used stops and 
advocated using stops at all times.

So, in regards to my expectation of a hard stock market decline into autumn.
Although history suggests it is a 100% probability, this time may be 
different.  I am not hedging my bet or forecast. I am just saying that I do 
not have a crystal ball or a direct line to the omniscient power of the 
universe.   I am short up to my eyeballs, but I still use stops to protect my 
position.

If you are a new and inexperienced trader looking to make a killing.  You can 
do it in the next 3-4 months.  But, you must not risk more than 10% of your 
risk capital and you must use stops.  As a matter of fact many traders today 
do not risk more than 2% of risk capital on a trade.  In this instance I feel 
more risk is justified based on the probabilty of success.  And never forget 
to protect a profitable position.  Never ever let a profitable position turn 
into a loss.  

Good Luck,

David