TheRiskBlog

Overtrading is one of the most overlooked mistakes you can make while trading. As a trader you want to make money any minute the market is open, this is understandable, but it doesn`t mean that you need to trade every opportunity that comes across your screen. Trade the most profitable ones and forget the rest. Here are 5 tips on how to spot and avoid overtrading.

Days like these are most interesting as far as risk management goes. Most of the times stock prices follow a chaotic pattern. Forecasting them is not easy if at all impossible but sometimes subtil changes in the surroundings make things forcastable. This happens when

Every trader who wants to be successful needs a set of rules he acts on – a system. Most build their system over years with growing experience, others buy one. To discover what works and what doesn’t most traders test different systems during their trading career, till they find or develop one that fits them and brings the consistent success they searched for. But it is not easy to test a system, because there is one problematic factor involved in it – the trader himself.

Equity markets have come a long way in 2009. And now everybody wants in on the move and everybody wants to own stocks since they are moving up. That describes the same situation we faced at the start of the century after Dotcom stocks moved over the edge. Sure this time the situation is different, we are in the middle of one of the worst crisis we have seen so far and it is an event felt worldwide. But that doesn´t mean stocks can go up forever.

The economy is not following nearly as quickly as markets suggest. The stock market has outperformed the real economy by far. So what do we need to do

Investing in the markets is hard work, at least if you want to be profitable in the long run. It does not help to be lucky on your next trade, you need to be “lucky” on your next 100 trades. In order to achieve a goal that lofty you need to make sure that you keep your losses small. Idealy you always hit the exit button just below zero.

In the real world this doesn´t happen to often, sometimes because the trader is emotional, hopes that the stock comes back or just wants to keep the stock for sentimental reasons.

If you want to improve your trading substantially, then make sure that your losses are tamed. For that i have put together the 10 most important steps to do this:

Up to now it was a tedious process that required skills and knowledge. Well, the bad news is, it still does, but the task got easier.

Mere mortals like us have no business competing with this guy, thats why we calmly sit down and listen when he talks. This is a real pro and he has been right about the markets at numerous occasions, so we listen again and adjust our risk management accordingly.

We all know what it is like when you see a chart and instantly know where the price is heading. Since you “know” that price is going up you go long. Now this was a controlled, rational decision you made, you saw the chart, you knew what was happening and you reacted, or was it?

Risk management dictates to start with small positions as long as your account is not substantially in the green. But what if you knew what other traders hold and where the money is flowing. If you had that kind of information, it ´d be easier to stock up on your position and

There are not that many things you can control when trading the stock market. But a few things you can control and they are very important to your Riskmanagement.

The most important is your account.

You are in control of selling and buying – and winning and losing.
How is that?