Stop loss is one of the three fundamental parts in trading ( the other two are take profit and entry). The subject of Stop Loss (SL) is very important and interesting to discuss thus this article! I would like to go over some of the advantages and disadvantages of using a stop loss as opposed to trading without one. I would love to hear your opinion on the subject below in the comment section – thank you!
So let’s begin:
First of all: An advantage for one trader could be a disadvantage for another one! Remember that, it is all strictly individual and you must find your way and what it works for you. There is no reason why two traders, one who uses SL and one who doesn’t, won’t make money at the same time.
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If you have a winning system with the right risk management you can still fail to be profitable if you do not have the right trading psychology to trade it with discipline.
If you have a winning system with the right trading psychology you can still fail to be profitable by blowing up during a losing streak without the right position sizing and risk management.
If you have the right risk management and trading psychology you can still fail to be profitable because you are trading with no edge because you don’t have a winning trading system.
Profitable trading requires three dynamics: a winning price action trading system with an edge, proper position sizing with risk management, along with the right trading psychology to allow you to trade your process with discipline.
The original post is authored by Steve Burns of newtraderu.com and is available here.
This article is for those traders (new or experienced) who have trouble booking profits. Do you often see large profits evaporate as the market reverses against you, leaving you feeling powerless and confused? If so, you know how frustrating it can be and you know exactly what I’m talking about.
Poor target placement, lack of experience, greed, arrogance and stubbornness are all issues that can cause traders to not take profits off the table.
I appreciate this article may conflict with some of my core beliefs and teachings on taking profits since typically I encourage people to aim for a 2 to 1 risk reward or greater and to set and forget stops and targets. In theory, this makes sense, but in the real world, as you likely already know, there are still a great number of trades that almost hit your profit target or where a trade has moved quickly in the right direction and you’re staring at a giant profit… and then the next day or week, the market goes the other way and your once giant profit has become a much smaller profit or even a loss.
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If as a TRADER you want to have disciplined and profitable trading, The Core Concept you need to Understand is
As a Trader, you do not have any control on the market.
Nil Control on Market
You’ve either figured out or you will figure out the fact that not much at all remains under your control as a trader. Dealing with an endless set of variables using a mind that’s geared by nature to defining constants is a tough task. Most of traders focus on returns and not focusing on the process of trading.
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The original article appeared on the blog of Stocktwits and can be found here.
People say it all the time.
Controlling risk is one of the most important things anyone can do when investing or trading. How much money are you comfortable losing on a single investment? How much of your portfolio is concentrated in one or two equities? These questions are only a few examples of what some risk managers might ask. There are many more.
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At StockArchitect, our intention is to help investors take informed investment decisions. We have been mentioning about the Masterminds who share their knowledge and their ideas for investors. We have also mentioned how news anchors share their views for the investors.
So is it all about the Masterminds and news anchors? There is more.
We strongly believe that it is of paramount importance that investors should be aware of the events that occur both locally and globally. After all investment decisions are impacted by these events. We therefore also cover a host of Business channels and publications just to ensure that the investors have all the news as they happen right in one place.
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