(Damn the Torpedoes, full speed ahead) is the famous battle cry of Admiral David Farragut. Historically, this was also a decision that risked everything to win an important victory in the battle at Mobile Bay during the American Civil War. But when you risk trading on the stock market, if you allow yourself to be subjective for a moment and risk too much, surely, sooner or later, you will suffer the consequences.

Winning at all costs ?

Many people apply the statement blindly. After a loss, you may hope to succeed another time, regain what you lost and possibly succeed again. After one success, you may feel unscathed. Even if you win when you lose, there is always the possibility that your feelings are out of your logical sense, which is not a true view in business.

There’s nothing more exciting than making predictions about markets and getting more out of those observations. Not only will you feel great for making the right guesses, But you’ll also feel secure with an unexpected fortune. After the red fortune, you will easily become subjective and start to make large trades.You’d easily have thoughts like, I don’t have anything to lose? I’m a long way ahead of the game, so I can still be a little more reckless. It’s useful to take advantage of your good fortune, but that doesn’t mean you’re going to act imprudently.

Trading is taking advantage of the possibilities and taking action on the assumption.

Maintaining discipline and managing risk (such as protective stops, option rights, risking a small amount of money in your trading account for a transaction) is essential to long term survival. You must also dismiss the tendency to want to make trades in an improvised manner. In general, you must remain disciplined. So what’s the harm of taking unnecessary risks? It can be said that market uncertainty is the main reason. You don’t know for sure if you will succeed in the next trade. When taking unnecessary risks, this shows that you are acting on the assumption that you will certainly succeed. But none of us have a glass bridge that predicts the future.

Trading is taking advantage of the possibilities and taking action on the assumption that if you make enough trades (and manage the risk for each one), the average law will be effective and beneficial for you. This suggests that, according to probability theory, you may have a wide range of luck and that when you make larger trades and minimize your limitations, you will reap satisfying results. But at the same time, you can also run a series of risks. If you act impromptuly, dismissing your risk management plan, you will pay with your own profits (or even more). So, continuing to manage risk, even after a series of successful trades, is essential for your long-term survival in the stock market.

There is always a sense of instigation to give up risk control and seek success at all costs in who you are. Some successful entrepreneurs risk their finances and make huge profits, but there are also entrepreneurs who pay for their failures. In the long run, it needs to exist in the market. Take control of the risks that will add to your chances of success.

[FINACNE24H.INFO] Copy and Share.

>> Read More : Five principles of value investing