One of the most important aspects of trading also is one of the most difficult to describe. Known as money management, trade management, risk control or a number of other terms, virtually all managers agree that this element is the single most important part of a trading plan. For the publication's purposes, money management will be how trades are allocated across one or more trading systems with a given pool of money. In the first of two parts, the authors will break down what responsible money management includes and develop a set of meta rules for applying it. Money management begins with proper performance assessment. If you don't know how well a system is trading, you can't begin to manage returns. This article begins its discussion with two terms: beta and alpha. Beta is calculated using regression analysis. Alpha is a measure of performance on a risk-adjusted basis.