Risk Management in Trading -How?

We all know that in trading you can lose money, it is normal, every trader loses money, you can not avoid it, but we can calculate our risk to have an excellent strategy even when you lose.

Trading Plan FIRST

What is a loss in trading? A loss is when our trade is not going well and you lose money, first of all you have to write down your trading plan, that is the strategy you will use to calculate the losses and the gains but also when and how to invest your money.

Risk % to trade

Many amateur traders often change the loss rate based on factors such as emotions, thoughts and much more, but this is completely wrong and the main cause of all this is : have no discipline. this type of people will not be profitable in the long run and will most likely abandon trading.

If we want to invest $1000, and we decide that the loss percentage is 1%, if we lose a trade, we get $990, and so on. But it happens that we often lose 4 times in a row, and as a result, if our trade loss percentage is 1%, we’re now at 4%, so at $960, and that’s not bad, but if our percentage is 2%, then with 4 losses it will be 8%, consequently we will lose 80$ and it’s not bad yet, but if we decide, that the loss percentage is 5% or 10%, now we have 20% loss or 40%, so it’ Very BAD, don’t do t it.

“the move that you’re afraid to make, could be the one that changes everything”

the ideal risk percentage is between 1-3%

The percentage doesn’t have to change every day, almost never, obviously a professional knows which percentage to use, instead a trader who is at the beginning of his career has yet to understand certain dynamics to better determine the percentage, but you can start with 1% 2% 3%.

If you are at the beginning I suggest you start with 1% or less, but never more if you don’t feel comfortable with. You can have 0.27% risk for exemple, it’s still ok, you must be in “tune” with the loss percentage (risk)

DISCLAIMER: This is for educational and demonstration purposes only, Not a financial advice, and you should always do your own research on stocks , forex, penny stocks and the stock market and others, results are not typical, Research brokers to use. I am not responsible for any loss or negative behavior of readers due to this article.

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