ALL >> Family >> View Article
Successful Trading - Establish Your Risk Level

Before you embark upon a journey of trading stocks or futures, and before you make any trades, you MUST determine and establish your risk level. Traders that fail to do this are usually doomed from the start. The fact is that most trading accounts that go bust are because of the failure to determine at what point the trader will cut their losses and move on to the next trade. Rookie traders are particularly prone to do this. They hang on to losing positions hoping that they will turn around - only to watch the price drop even further. Too much thought and effort are expended on the buying decision instead of the selling decision. The sad truth is that it's the selling decision that will determine your fate as a successful trader. And successful trading is dependent on how long and how well you can protect your account against loss until the big profit comes your way. Setting a risk level for your account and for your trades will provide such protection.
If you're like everyone else, you've got an online trading account and you're free to move in and out of positions without the input or interruption of a broker. ...
... If you're not doing this, we recommend that you do. So when you buy a position, have you determined where you would to sell it if the price would fall? Many traders only think about the price going up - they never think about what they'll do if it goes down. You MUST determine this limit BEFORE placing a trade.
We recommend that get out of the position if it drops anywhere from 7% to 10% from where you purchased the stock, option or commodity (or any other market derivative). Yes, it could rebound and take off 100 points after you sale, but it could also drop 100 points and your account would be wiped out. Consider this, if your account drops 50%, then you need a 100% gain to get it back where you were! This is why you MUST place a stop-loss after every trade you place with your broker. Do this without fail IMMEDIATELY after placing a trade with your online broker. Once you've placed a stop-loss level with your online broker, the system will automatically sell your position when that level is reached. Remember, stay in the game until you hit that big trade!
ABOUT THE AUTHOR
Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading in the markets, visit his website, http://www.earncashathometoday.com/trading-stocks.htm
Add Comment
Family Articles
1. "how Bipolar Disorder Affects Daily Life And Relationships"Author: Lisa Miracle
2. How To Authenticate A Dior Bag
Author: tomgx
3. Adjusting To Parenthood: Navigating Changes And Strengthening Relationships
Author: ImPerfect
4. Managing A Property Damage Claim Everything You Need To Know
Author: legeal
5. Mosquito Control With Origin Exterminators In Singapore
Author: Origin
6. Best Spine Surgeon In Delhi Ncr
Author: Dr. Sanyam Jain
7. Cvcb.,kjhgfd
Author: esrdhtfygukilo;lkj
8. Understanding Baby Cues: A Guide For New Parents
Author: Starlit Babies Doula Services
9. When Is Baby Spit-up Too Much?
Author: Starlit Babies Doula Services
10. The Magic Of The 5 S's: Postpartum Doulas And Newborn Soothing Techniques
Author: Starlit Babies Doula Services
11. Experience Quality And Flexibility With Custom T-shirts And Vinyl T-shirt Printing At 3v Printing Store
Author: Steve Johnson
12. Finding Balance: Overcoming Guilt As A Working Mother
Author: ImPerfect
13. Where To Get An Esa Letter In New York: Trusted Sources And Tips
Author: Justin Foley
14. The Bright Side Resorts
Author: Bright Side Resorts
15. Why Would You Require Self Storage Services?
Author: Roxanne Ferdinands