My Share Trading - Risk Management

Risk and the Trading Game

Marco Palmero — Fri, 25 Sep 2009 15:14:33 +0000

Every time you initiate a trade you start a new game in which you assume all risks for playing the game. By choosing to be an active share trader (or forex or CFD trader) you are seeking risk for a larger return on your cash. One of the most important elements of your trading game is managing risk. Smart traders are always on the lookout to reduce their trading risk and watching the risk currently in play on their trades.

Risk Free Trading

Marco Palmero — Thu, 18 Jun 2009 05:51:58 +0000

You must be dreaming! Trading is inherently full of risks. There is no such thing as risk free trading. Or is there? If you start paper trading, or using a trading simulator you are effectively trading without risk. If you decide to go down that route remember to keep a trading journal to record your feelings and decisions. Trading on paper is not the same as trading with money on the line - even if you risk relatively small amounts of money.

Nature vs. Nurture and Trading

Marco Palmero — Sun, 11 May 2008 22:06:40 +0000

What the Turtle Trader trading book does is question the age old debate between nature versus nurture. Do genetics and people’s innate qualities predetermine someone’s success in the markets? Or is it someone’s personal experiences from learning, interaction with peers and direct personal practice with trading the markets determine success?

Major Losing Trade: What Should I do?

Marco Palmero — Mon, 05 May 2008 23:37:14 +0000

I was asked recently about what they should do when you are trading and come up with a major loser of a trade. A major losing trade is a trade which you just let go to run its course. It is no longer part of your trading portfolio but has migrated into your investment portfolio by default. Instead of cutting your losses short as every trader should do, by calculating the exact stop loss level to exit at, you held on with hopes that the price will reverse and start heading the direction you wanted it to go to.

Two Percent Trading Mechanics

Marco Palmero — Thu, 10 Apr 2008 22:09:15 +0000

So how do you implement your trading money management with two percent risk management strategy? In this post we will be examining two percent trading mechanics, how you use the rule and some clarifications about the rule. We will extend the rule to cover sensible stop loss levels.

Two Percent or Die

Marco Palmero — Sun, 06 Apr 2008 21:57:37 +0000

Two percent money management is very important especially when you are daytrading and actively trading the markets. Lets take a look at a tale of two traders with this table. You must apply the two percent rule with due diligence: that’s two percent or die. Examine the case study table below:

Sue the Stockmarket!

Marco Palmero — Wed, 02 Apr 2008 19:42:25 +0000

Here is an article about a gambling addict who lost $30 million and is suing the casino for it. Imagine if you, the trader, can sue the house – the stockmarket for any huge losses. There'd be no markets since losers would continually sue the markets. Trading may be gambling but any losses incurred are totally your responsibility.

Two Percent Risk Management

Marco Palmero — Thu, 20 Mar 2008 01:58:02 +0000

Good trading is not enough to succeed in the markets. The secret to successful trading is in great money management. The skill of money management is required because the real business of trading is making money with money through controlling risk. And an integral part of great money management is a great risk management strategy. The heart of that strategy is the magic 2 percent. So why two percent?

Rogue Trader Psychology

Marco Palmero — Tue, 29 Jan 2008 21:25:45 +0000

Jerome Kerviel. Rogue Trader. As this case unfolds, more and more information is being revealed. He was the quiet guy with a not-so-impressive education background. Many of his peers may have been picked from the prestigious Grandes Ecoles, the Harvards and M.I.T.'s of France, and wielded advanced degrees in math or engineering. Kerviel came to work with a business school background and started work in the bank in the back office. Can we learn a valuable lesson from this case?

Trading Risk and Leverage Case Study

Marco — Wed, 06 Sep 2006 13:46:50 +0000

A short case study on trading risk and leverage using forex trading as an example: