Risk Management

Keep that Trading Insurance Policy handy!


Trading Stocks or Forex is a risky venture. Don't you wish there was an insurance policy for trading stocks?

I recently went on a trip overseas, and as part of my preparation of going I bought travel insurance. Why did I buy travel insurance? Of course, to reduce my risk of financial loss as a result of any loss, sickness or misadventure. As a trader there are avenues to reducing your trading risk. There are many ways to reduce your risk when you trade.

Health Over Money


Have you gone through this:

Sweaty palms. Obsessed with watching your charts. Breaking your trading rules. Dizziness. Fear. Greed. Loss of concentration. Heart beating fast. Headaches. Loss of confidence.

Fell into a Loser's Mindset?


Have you ever had a losing streak in your trading? Have you ever wondered if it was just a simple drawdown? A flaw in your trading system? Or was the losing streak a result of something a little more sinister?

Having a losing mindset is a dangerous hazard to your trading. My trading blog entry discusses what you should do if you ever fall into a losing mindset.

Gambling Revisited


Trading Stocks is Gambling After All... So Why is Gambling Bad? I want to return to the question of share trading being gambling. Is share trading gambling? Previously, I argued that share trading comes pretty close to the definition of gambling, but the fine line is that share trading often involves a business plan and a risk management scheme. Others may argue that professional gamblers have these two elements at play. They have a plan of attack - their game, and a risk management strategy. I was reading this article about Joe Hachem who won the World Series of Poker in Las Vegas last year. Here's what this professional poker player said: "To me, it's a business," Hachem said. "Over the long run, poker is close to 70-30 in terms of skill to luck. So, I'm not going back to see if I can get lucky." Which is interesting because that is a similar attitude that a professional trader would have towards trading the stock markets.

Gambing Revisited


Trading Stocks is Gambling After All... So Why is Gambling Bad?

The Trader Who Trades with No Stop Losses


I Pity the Fool who Trades with No Stop Losses... And That Fool Was Me. After a series of losses, you start to realise that stop losses are a trader's best friend. And that's exactly what is happening to my account as of late. But it doesn't matter - you can't expect to profit all the time... all that matters is that when your trades are profitable - you let them run and when they are not - cut them short.

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