One of the leading traders on Chicago Mercantile Exchange, as a single trade lost everything!
For all his years of experience and money, he did not master the most important concept in trading: Risk Management!
Seems every trader for its own unique way of identifying market opportunities to have. You buy a stock hoping never to have to sell it, while another can hold for a day or even a few hours. A position in the market But two people would be in the markets. Hugely successful How can that be?
It is because every trader who has been consistently successful in the markets mastered the concepts of risk management.
Warren Buffet's two rules of investing are:
1. Lose money and never
2. Never forget rule number 1!
Paul Tudor Jones says he's always thinking about losing money as opposed to making money. He does not focus on making money, he is focused on protecting what he has!
Jim Rogers, who for years was a partner with legendary hedge fund investor George Soros, said: "My general advice is to not lose money!"
Bernard Baruch, the renowned investor from the first half of the 20th century advised "Learn how to lose. Quickly and clean"
Yet, when most people start trading, the only thing they think about is the profit target. Countless hours are spent discovering how to buy and sell on the market with relentless precision. Once they buy a market, the amateur trader thinks only of how high the market is going to go. Little effort is seen how low the market would bring, and where they should be allowed to check their losses.
These thoughts, so far from the minds of most traders are what separates the winners from the losers.
Risk management is the practice of determining to risk for each trade in order to maximize the expected profit. Potential of your trading strategy what percentage of your account
Once this amount is determined, the rate must be translated into an absolute value and stop loss orders are placed once a course has been introduced to control. For possible losses on these value
There is no guarantee that such efforts will control your losses, as the market may gap in price beyond your stop loss order, resulting in losses greater than planned.
Ioannis - Evangelos C. Haramis was born in Greece in 1951 and studied in Greece, the U.S. and Belgium. He has been active in the equity markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank and the editor of
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