Always remember that the moment you enter a trade, you are risking money. Keep that in mind whenever you are putting on a new position. You are risking real money. So, are you going to risk big or are you going to risk small?
Remember that no matter:
- How strong your conviction is on a trade.
- If you got the trade from some tip telling your it’s a sure thing.
- If you get your ideas from some subscription service.
- If you bought some blackbox / robot to trade for you.
- If your strategy has a win rate of 95%.
You are still risking money the moment you put on a trade. Anything can happen in the markets at any time. Markets are not predictable with 100% certainty.
In addition to the above:
- We jump from one strategy to the other.
- We chase trades (FOMO).
- We overtrade.
- Lack discipline and patience.
- We trade with our emotions out of wack.
… and so much more.
With all that in mind, why would you want to risk 10% or 20% on any given trade? What justifies taking such big risks?
Traders are risk takers and for that reason we also have to be risk managers. We have to take risk responsibly.
How can we be more responsible as risk takers?
- Understand that not all trades will be winners no matter how great your strategy.
- Respect risk and respect the markets.
- Risk small, never bet the farm.
- Take calculated risks. That is, take risk based on a backtested trading strategy with a proven edge.
- Stick to your strategy.
- Don’t base your performance on individual trades, but rather over many trades.
- Think long – term.
- Practice patience and discipline.
Thank you so much for reading, I really appreciate it. Hope you and the loved ones are well and safe.
Thanks and Regards,
Trading SOS SOS