Riskmanagement Tip 002
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 it is not very difficult to see that AAPL might be a good trade because our risk is limited. So in this situation we can buy the stock and wait what the company has to say about their newest iPhone. Most likely they will come out with news about the phone on Monday, 8th june and if trading the stock should generate any income, we need to be in the stock before that.
If we are not right and the news are not good, the stock will go down but we have a stop for that. Since stock prices move in the direction of the least resistance, this direction with AAPL is long now.