October 14, 2018

Trading is all about risk minimisation + The market is not the enemy

Trading is simply entering a position and then defending the risk involved with that position. 

Defending the risk is about finding low-risk set-ups, moving the protective stop to breakeven as soon as it is appropriate and trailing the stop as the trend develops. In that mind-set, I simply don't think about the potential of a loss and I am completely free to accept what the market gives me each day.

Unfortunately, this is very different to what passes through the minds of most people when they get into a trade. They tend to look for confirmation by reading a public bulletin board or even by unconsciously only accepting information that agrees with their position and rejecting information that conflicts with their position.

The market is not the enemy

Other people approach trading as if they are in battle and the market is the opposition. The market is not the enemy. It cannot hurt you. You can hurt you, but the market simply facilitates the buying and selling of shares and as such provides feedback via its prices. What you do with that feedback is up to you. If you don't use a protective stop, if you use too much leverage, if you do not allow the trends to be ridden, if you bog yourself down in too much analysis, you will lose money.

Source: Successful stock trading by Nick Radge

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