Survive Stock Losses And Trade Another Day
If you plan to trade for a long time, you have to keep in mind that stock losses can't be avoided entirely
. It is part of every trader's life to come to terms with the possibility of one day experiencing losses. Don't think that this is bad. This is just how matters are in any trading market.It is perhaps because of the reality of losing that makes investors extremely eager to regain what they've had to let go. This is one reason why they become obsessed over finding perfect indicators and systems that will give them numerous wins. What they should realize though is that their main objective should be to survive and not merely to increase their number of wins.
There is a sensible explanation as to why it is more vital to survive investment losses. If you don't struggle to stay in the market, you run the risk of losing your entire trading float and getting barred completely. What this ultimately means is that you will have no money left to use for trades that offer potentials for profit. It is therefore no longer the frequency of wins that matter most but the ability to stay on the playing field.
One way to help you make sure you don't get ejected early on is to set a specific percentage for your maximum loss. Doing so will remind you of the exact degree or magnitude of stock loss that is bearable for you. With a figure set in stone, there is no danger that you will have to let go of everything all at once before you are even given the chance to make initial profits.
Loss limits are not the same for all traders. There are those however who are so very careful that they only consider losing 1% of their trading capital. There is a possibility though that this limit may be too rigid. Although you may be able to escape losses with it, you will be limiting your win potential too much. It may be more advisable to go for 2%. This can offer you protection while at the same time giving you the best opportunity to make profits.
What is especially beneficial about setting limits for your stock losses is that you make it nearly impossible for you to come out as a complete loser. With the 2% limit, it can take an absurdly long string of defeats before you are able to erode your float entirely. This is because every single loss is computed based on the current available float and not on the initial float that you set up when you started trading. The smaller your float gets, the smaller your maximum loss figure.
Of course, setting limits on how much you can endure to throw down the drain is only part of a bigger picture. If you want to increase your chances of surviving even more, you need to work on establishing a complete money management system. This involves identifying other crucial elements such as trading float and initial stops.
You should not allow investment losses to ruin your chances of trading success. Although it's not possible to get absolute protection, you can still do something to make sure losses don't destroy you. Create your money management plans now to make sure you never lose too much.
by: Reece Mathews Buying Guide - Shop For Sexy Lingerie Online How to Make Money Online In 5 Simple Steps Online Degrees Offer Saving And Diversity For Your Bachelors Degree Online Support And Chat Facility Help The Students To Get Expert Assistance! How to Get Started In 6 Basic Easy Steps and Start Making Quick Money Online Legitimate Paid Online Surveys And More Why Study Online? Your Personal Formula For Wealth Online How To Get Online Violin Lessons How To Make Money Online - Common Questions - Part 1 Is Online Mahjong set to be the Next-Big-Thing? TRADE AT GHANA Shop Online For Best Area Rugs And Save Money