Article Maintaining Consistency in Risk

T2W Bot

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For this article I would like to illustrate three particular scenarios which deal with various aspects of risk management. In addition to the required and necessary skill-sets involved in consistent speculative trading, maintaining a constant and disciplined approach to capital preservation is ultimately the number one objective for any professional in the field. Failure to adhere to these risk management principles will typically result in ongoing frustration and concern for any individual aspiring to attain market success.
In the classroom learning environment, I always advise my students to maintain a risk parameter of between 1% and 2% of their account balance. Therefore, should they be working with let’s say a $10,000 trading account, any open trades and positions should never carry a greater potential financial loss of between $100 to $200. By sticking to this strict rule, the risk-aware trader can safely engage in the markets with control and comfort in knowing that they can...

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