STDs (stock trading disasters) are common occurrences among beginning stock market traders. As a rookie, it is easy to forget the fundamentals of proper trading when you are blinded by all the get rich quick propaganda that goes along with being a trader. That type of thinking runs ramped within the mind of a new trader. I wanted to combat that with some sound risk management methods I have used with great success.
Early in my career, I figured that not all the rules of becoming a successful trader were applicable to me. I was somehow the exception to the rule. In fact, I was so exceptional at losing money that I was on the fast track to bankruptcy. A few gargantuan losses quickly sobered me up.
In short, I was a young punk who knew everything about nothing. I often times had to learn things the hard. Learning to trade in the stock market was no exception. So, here are my top three ways to prevent an STD.
#3 Way To Prevent An STD
Perform thorough market research! Taking proper research for granted is a one-way ticket to Brokeville. Trust me, I know. Due diligence is required in order to side step a poor stock decision. Remember, getting into a bad trade is simple...getting out is costly. Give market research the time and attention it deserves.
#2 Method Of Avoiding an STD
Make decisions based on facts not emotions! Hope and wishful thinking are two qualities that gamblers possess. Ever read about any successful stock market gamblers? Just face it; you will make mistakes along the way. It is a part of the learning process. As a trader, you must be willing to make corrections quickly. Making too many errors, too fast will certainly result in you being forced into retirement due to lack of capital if you do not adhere to the method #1.
#1 Way To Avoid an STD
Nothing protects you from an STD like a stop loss. After placing your order, ALWAYS set a protective stop. Trusting yourself with the duty of managing risk without one is a clear indication that you are destined for failure. Although far from being perfect, it is the only insurance policy a trader has against massive losses. By not setting a protective stop loss, you are just teaching us all a lesson in philanthropy because you are just giving your money away!
Using a protective stop loss is by far the most effective technique for limiting losses. Fortunately, it is also the simplest of the three to apply. Methods 1 and 2 are developed over time. Avoid getting burned with my top three risk management methods.
Early in my career, I figured that not all the rules of becoming a successful trader were applicable to me. I was somehow the exception to the rule. In fact, I was so exceptional at losing money that I was on the fast track to bankruptcy. A few gargantuan losses quickly sobered me up.
In short, I was a young punk who knew everything about nothing. I often times had to learn things the hard. Learning to trade in the stock market was no exception. So, here are my top three ways to prevent an STD.
#3 Way To Prevent An STD
Perform thorough market research! Taking proper research for granted is a one-way ticket to Brokeville. Trust me, I know. Due diligence is required in order to side step a poor stock decision. Remember, getting into a bad trade is simple...getting out is costly. Give market research the time and attention it deserves.
#2 Method Of Avoiding an STD
Make decisions based on facts not emotions! Hope and wishful thinking are two qualities that gamblers possess. Ever read about any successful stock market gamblers? Just face it; you will make mistakes along the way. It is a part of the learning process. As a trader, you must be willing to make corrections quickly. Making too many errors, too fast will certainly result in you being forced into retirement due to lack of capital if you do not adhere to the method #1.
#1 Way To Avoid an STD
Nothing protects you from an STD like a stop loss. After placing your order, ALWAYS set a protective stop. Trusting yourself with the duty of managing risk without one is a clear indication that you are destined for failure. Although far from being perfect, it is the only insurance policy a trader has against massive losses. By not setting a protective stop loss, you are just teaching us all a lesson in philanthropy because you are just giving your money away!
Using a protective stop loss is by far the most effective technique for limiting losses. Fortunately, it is also the simplest of the three to apply. Methods 1 and 2 are developed over time. Avoid getting burned with my top three risk management methods.
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