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Trading on the stock market is a risky business. But managing that risk, and your perception of risk is the key measure of success.

The only thing people fear most about the art of losing scholarship money. A ship which is rarely observed, is never trade with money you can not afford to lose. This is good advice. Many people borrowed money to trade during the Dot.com bubble erased most everyone in the detonation dot.com.

How can we manage risk and our perception of it? Our concept of money varies from person to person. Someone who is worth $ 1 million per year, not losing a lot of thought and $ 1,000, but for someone earning $ 15,000 a year, loses $ 1,000 to see him break the bank.

The way our understanding of changes to keep the money as a way to earn more money is not practical now so we must abandon feelings of money.

Think about $ 500, you feel well or you lose sleep at night? When losing sleep at night there would be many emotions associated with this amount in this report. Try it with an amount less than $ 100. Easily trade at $ 100; is better, then this is the level of comfort you. The trades of this money until you are happy to cooperate with the increase in trade.

Trade at home with more money comes from experience. If you find that trade is more than we lose, then the confidence in your ability to see the market building. If it is not arrogant. Once you bite, the market is exuberant. Keep your little boat, and gradually up to higher value activities.

So now that we are treated to the perception of risk, you must now make sure that you will not lose all your money. That is, ensuring that you always have to repeat that ever put a stop loss is to the profession.

One approach, so the loss is mandated to sell (or buy if you sell shares) the trade name that you do when you reach a certain level of loss. For example, if you buy the Google (GOOG) to $ 460 and then declined as Rose, stop losing your level is where you decide that you do additional damage will be. Thus, in this case, I set my stop at 10% less than the price at me.
This means that the shares will be sold automatically to 414th will receive $ loss, but I do not want to lose all my money.

Once you've set your limit to lose, what you have should not move down. However, you can guarantee your stop loss increase as the price increases. I want my back to stop the share price 10% lower, but keep a close stop losses (ie, 4% appropriate) markets are less volatile.

Think about your business as a business. In business, the turnover you want, you can win (winning trades), but you will, and operating costs, such as utilities, telephone, etc. Think of your losses as business expenses. By placing a stop loss on your transactions, you ensure that your costs do not go very high, and wipe your profits.

2 comments

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Jennifer Howard said... @ December 12, 2012 at 3:43 AM

Vice post,glad to know about risk in the stock market,I'll be careful.Thanks Buy best penny stocks

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