Learn How to Lose and Risk Management

One of the leading traders on Chicago Mercantilethink about is the profit objective. Countless hours
Exchange, because of a single trade lostare spent on discovering how to buy and sell the
everything!For all of his years of experience andmarket with unwavering accuracy. Once they buy a
money, he had failed to master the most importantmarket, the amateur trader only thinks about how
concept in trading: Risk Management!Each traderhigh is the market going to go. Little effort is put into
seems to have his own unique way of identifyingconsidering how low the market could go, and where
market opportunities. One buys a stock in the hopesthey should get out in order to control their
of never having to sell it, while another might hold alosses.These thoughts, which are so distant from the
position in the market for a day or even just a fewminds of most traders, are what separate the
hours. Yet both individuals might be immenselywinners from the losers.Risk management is the
successful in the markets. How can that be?It'spractice of determining what percentage of your
because every trader who has been consistentlyaccount to risk for each and every trade in order to
successful in the markets has mastered the conceptsmaximize the expected profit potential of your
of risk management.Warren Buffet's two rules oftrading strategy.Once this amount is determined, this
investing are:1. Never lose money and2. Never forgetpercentage must be translated into an absolute value
rule number 1!Paul Tudor Jones says that he is alwaysand stop loss orders must be placed once a trade is
thinking about losing money as opposed to makingentered in order to control potential losses at this
money. He does not focus on making money; he isvalue.There is no guarantee that such efforts will
focusing on protecting what he has!Jim Rogers, whocontrol your losses, since the market can gap in price
for years was a partner with legendary hedge fundbeyond your stop loss order, resulting in losses
investor George Soros, said "My basic advice is don'tgreater than planned.Ioannis - Evangelos C. Haramis
lose money!"Bernard Baruch, the renowned investorwas born in Greece in 1951 and he studied in Greece,
from the first half of the 20th century advisedUSA and in Belgium. He has been active in the stock
"Learn how to take losses quickly and cleanly."Yet,markets since 1972.
when most people start trading, the only thing they