TheRiskBlog

Listen to this:

“Stock rally continued from yesterday afternoon. Market opened firm, bears attempted attacks early, particularly on US Steel based on recent drop in steel product prices. Attack quickly failed, Steel gradually gained, and gains spread through other leading industrials, many of which had large gains from recent lows.”

Take a wild guess at when this message was printed? “Gains in leading industrials. The market opened firm.” Is this message from last week or

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

you know what this means. When a house is bought you can change anything but the location. So we need to think about the location before we buy, this means we are thinking about the most important factor beforehand or in other words we take care of the single factor that determines the bigger part of the price of the house before we buy.
Now for the stock market the same is true but the phrase goes more like Exit, Exit, Exit….
Other than the location of our real estate we could always change the exit of our trade after we bought the stock, but then again while trading in the market this is the single most important factor to determine our profit.
Oooops…so you thought it was the Entry that made you rich? Not even close, when entering a trade your broker will be happy because he just earned himself some money, not you did.

So this means we are in the red, right there, right after entering the trade and it all looked so good after analyzing before we decided to jump right in. So what does this mean.

It means that we can analyze all we can, it doesn´t mean anything, when we enter the trade we are randomly taking part in the market and the only way we achieve any kind of profit is by controlling a few parameters that we can control.

Obviously we can not control the price movement after we hit the button but we can control how much we want to win or lose. So, we can control our exit and that is exactly what we need to do. You need to take control of your trading and the best way to do that is by controlling the things you can control not the things you can not control.