While most of us are willing to spend countless hours searching for the perfect entry and exit signals, very few of us take the time to think about what very basic money management will do for our bottom line.

Nowadays, when people think of money management, most think of Optimal f or similar strategies that advocate risking a constant percentage of account equity on each trade. However, for most proprietary traders with limited means, Optimal f-type strategies have limited usefulness, and they can be very dangerous if applied the wrong way because for smaller accounts (i.e., $100,000 or less) it is difficult to match the proper amount to risk per trade (up to approximately 2 percent) with reasonable small changes in the number of shares or contracts traded (depending on market volatility, etc.).