Welcome to my Risk Management Tips for Beginners Guide.
Step 1:
This entry starts a short series of tips on how to proper manage the risk in your portfolio. It gives you the basics of the risk management process and guides you through the decisions and strategies you´ll have to consider when investing.
For starters this should be a good first.
When we invest in the markets we basically trade two things - those things being greed and fear. If we can identify either one of them, the process of committing our hard earned money becomes a little easier. But because we do not get a hint all the times at what to do in the markets we have to protect our money first.
1. Protect your capital, make sure that you do not lose to much money on any given trade. If you start doing this it will keep you in the game longer and this way you will not miss out on the opportunities.
2. If you can keep your balance close to zero and don´t go underwater to often, winning trades will bring your capital up on their own.
3. Having an opinion is ok, but you need to know what the market actually does. If you thought, the market needs to go down, but it goes up then you turn around your short positions.
So, watch your trades at all times and don´t let your ego come in the way of stopping out on a losing trade.