TheRiskBlog

In trading there are only two things that will eventually kill your account for sure. One is mean reversion and the other is averaging down.

Now, what does this mean? Let us take a look at mean reversion first. What are we doing when trading a mean reversion system?  In a world of high volatility and uncertainty about next day events, it is essential to find opportunitys. Some Traders found it helpful to trade

Seth Godin says its best in this post.

It is the future that makes people buy stock it is not the past.
When you think about risk management, this becomes very important. People are not interested in what happened months ago because all is done and said and more important it already changed their account. It still might do that in the future but it is more likely that new news are far more interesting.

Thats one of the reasons why technical analysis is overrated. It does look back, it does not look forward. When investing

We all know - or should know - that it affects us negatively when we make a trading decision while we’re in a highly emotional state. And we are told that we should “trade without emotions”.
But does that mean we should become emotionless computers?  That we should only decide because of calculations?

Not exactly

It rather means that we try not to get overwhelmed by our feelings, especially while trading or making important decisions. Such distracting feelings can be for example:

Risk has to do with how much money you can lose or you are willing to lose. If we know that a certain stock goes one direction only it means, that we can make money in that direction.
Our risk to lose in that direction is limited.
This is what we see in the market right now. Compared to all other phone manufacturers