The One True Golden Rule of Stock Trading: Smart Risk Management
The Market Speculator: The One True Golden Rule of Stock Trading: Smart Risk Management
I took these words to heart. I will not trade a stock unless I have a 2:1 risk ratio. What this means is if I risk one dollar, I must have a reward of at least two dollars or I do not take the trade. In other words, if I buy a stock at $100, and my stop is at $98, my target must be at least $104.
My trade results back the benefit of smart risk management. Members of my nightly Trade Report receive an alert every time I enter or exit a trade. Since the Report started on May 13, I have made 14 trades. My win rate is exactly 50 percent. You would expect that I am breaking even, right? Wrong. I am up $7,543 in just over a month (and that does not include the +$4000 YELP trade, which I am still holding). My average win is +$1628 while my average loss is only -550. I am getting 3:1 on my trades.
How did I get these results? By having a plan before entering the trade and making sure I always have at least a 2:1 risk ratio before entering a trade. It’s all about risk management, the one true golden rule.
If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up for a 7 day free trial at BullsonWallStreet.com.
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risk management,
stock trading strategy,
swing trading
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The One True Golden Rule of Stock Trading: Smart Risk Management