Covering developments in the financial world, and providing the latest updates on TradingHD’s courses' offerings
What I want to talk about now is the fifth and final step, which is risk management. The reason where most new traders go wrong is by taking too much risk. There is a saying that there are old traders, and bold traders, but no old bold traders. This means that if you want to survive and trade for the long run, you need to control your risk.
In previous columns I discussed my 5-Step-Trading® process. I mentioned the importance of having your own ideas, instead of copying those from other people, and of doing a basic and simple analysis of the company you consider investing in. We then looked at charts and how they help you improve your timing, and the importance of setting price targets and stop-loss levels. Now I want to talk about Step 4 which ensures that you are psychologically prepared to trade.
After you have indeed taken some time to analyse a company based on its fundamentals, you should still not go out and buy the stock. Because first you need to take some time to look at its chart. This can tell you a lot more than you think, and that is why it is step 3 of my 5-Step-Trading® process.
Last time we discussed Step 1 of 5-Step-Trading® which was generating your own ideas so you don’t get stuck with an investment based on someone else’s idea and not knowing when to take profits or when to give up and get rid of the position at a loss.
I made the case in my previous columns on why it makes sense for some people to manage their money themselves instead of giving it to others to do it for them. I explain how to do this using my 5-Step-Trading® methodology which is composed of the following five steps.
In my most recent columns I made the case why it might make more sense for some people to invest their money themselves rather than giving it to a professional money manager.