I attended the Asian Traders and Investors Conference 2008 back in March at the Suntec Convention Center.
I randomly picked a few paid presentations to attend. One of them was by Brent Penfold. The topic of the presentation was "How I trade world index markets for a living". He is a mechanical pattern trader who trades when certain market conditions are met. The presentation covered systems like "The road runner trading system", "cyclepoint swing trading system" and others.
But it was his sub-topic on money management that caught my attention. It is a fixed ratio money management system created by Ryan Jones. The idea is that:
(1) As you lose money you should trade less contracts, and
(2) when you're winning you should trade more contracts;
Each contract must make a delta amount of profit before you can trade an additional contract.
This is very similar to Dr Elder's 6% rule which states that "you must limit the risk in your ENTIRE trading account as a whole for a SINGLE month. If you are trading a $100,000 account and risk $1,000 on every trade, you may not have more than 6 open trades at any given time. Suppose you lose money on two trades - now you are not permitted to have more than four open trades. You've already lost 2%and have only 4% open risk available for the rest of the month.
Basically, the rule allows you to have more trade when you're on the roll, but slows you down when you are starting to lose money.
Bottom line is: You are free to adopt any kind of money management rules you like but you certainly need have to have one.