The Mathematics of Money Management by Ralph Vince

The Mathematics of Money Management is one of the greatest books about the money management in trading. Like in many other fields, money management has two principal sides — psychological and mathematical. Psychological part is about putting the right amount of money at risk at a right time and why emotions tell you to do otherwise. Mathematical is about putting the right amount your funds at risk at a right time, and why statistics tell you to do so. This book is mostly about mathematics. It will give you a system to adhere in order to stop losing money where you shouldn’t lose anything. Even having a good market entry/exit strategy doesn’t guarantee that you will earn from trading; managing your money properly is very important in every kind of financial trading, that’s why I recommend this Forex book so much.

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Below you can read the reviews of the book and also submit your own review about The Mathematics of Money Management by Ralph Vince.

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5 Review

  1. Ronin:

    Before picking up this book it is important that you get a very basic idea, which is wrong, out of your mind. Money Management is not about any sort of risk or reward. Though you cannot ignore its importance, you cannot treat it as a mathematical technique. Ralph Vince discusses many new concepts in this book and all of them can be applied to a level of trading that gets you maximum gains.
    He starts his newest book by writing about some of the techniques he mentioned in his last book. This is very important as his method of “Parametric Optimal F” is almost entirely stemming out from his previous book. It is a method enabling any trader to determine the trading level that suits him best. Vince differentiates between the old theories of optimal weights and distinguishing between optimal weight and quantities for leveraged accounts. He introduces a theory called “optimal of the optimal” which is an amalgamation of the optimal f theory with what is often called the Markowitz e-v (modern portfolio technique) method to successfully design an ideal portfolio. He also writes briefly about the Black-Scholes Options Pricing Mode, and the Black Futures Option Pricing Model with the inclusion of several others to make his new theory even more optimal.
    This book isn’t one of those you can just sit down on a sofa and read at a stretch. It will take you longer than most books as you will hope take a small break after each chapter and make a small summary of what you have just learnt and interpret in your own way. (If you are able o easily create formulas for the same you can use Excel or Minitab.)
    One error that I would like to point out is that in the first chapter on the E-V Theory, the author surely makes a mistake while using the Lagrange method to determine the partial derivative.

  2. Aria:

    The author of this book is obviously a very knowledgeable man with a high academic level and his book is proof of that fact.
    I still feel that different people use different methods and it is better if the distinctions between the application of the Modern Portfolio theory, the Infinitum quantitative methods and the Practical Portfolio Theory are maintained. Clubbing them is not the solution.
    I would like to propose that you discover which theory applies best to your preferred method of trading and discourage the publishing of such books which claim to achieve weird goals.

  3. rudy:

    Ralph Vince has obviously spent a lot of time and effort in coming up with the Optimal F theory. Nonetheless, it seems as if he forgot the existence of an active trade market where such theories can actually be put to test. It is indeed important to take some risks but Ralph Vince defines unreal levels of it. Even the most successful traders have a backup plan so that their trading can continue in case of any unfortunate event. Use the Optimal F at your own risk because it will definitely lead to no good for you.

  4. C. Li:

    I had to stop myself from giving this book five star just because of the sheer absence of enough examples. It contains many theories and techniques but none of them have been adequately substituted with practical information. I advise you to pick up some other book if you want the author to spell it all out to you. If you don’t like mathematics this book is not for you. Well, if you don’t like mathematics, then even the trading market isn’t for you. The author teaches you how to profit from the optimal f theory. I found this a very difficult book to read and unless you have majored in rocket science or something similar, you may find this book a challenging read.

  5. BarrackObama:

    Ralph Vince teaches you methods to successfully undertake futures trading. All the doubts you may have had regarding futures trading, like the number of contracts you should buy, your risk limits and methods to damage control, have been dealt by the author very nicely. Though you require some basic mathematical knowledge before approaching the book, spending some time on it will make it look easier.
    You have to get this if you dream of being a successful trader.

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