| One of the leading traders on Chicago Mercantile | | | | think about is the profit objective. Countless hours |
| Exchange, because of a single trade lost | | | | are spent on discovering how to buy and sell the |
| everything!For all of his years of experience and | | | | market with unwavering accuracy. Once they buy a |
| money, he had failed to master the most important | | | | market, the amateur trader only thinks about how |
| concept in trading: Risk Management!Each trader | | | | high is the market going to go. Little effort is put into |
| seems to have his own unique way of identifying | | | | considering how low the market could go, and where |
| market opportunities. One buys a stock in the hopes | | | | they should get out in order to control their |
| of never having to sell it, while another might hold a | | | | losses.These thoughts, which are so distant from the |
| position in the market for a day or even just a few | | | | minds of most traders, are what separate the |
| hours. Yet both individuals might be immensely | | | | winners from the losers.Risk management is the |
| successful in the markets. How can that be?It's | | | | practice of determining what percentage of your |
| because every trader who has been consistently | | | | account to risk for each and every trade in order to |
| successful in the markets has mastered the concepts | | | | maximize the expected profit potential of your |
| of risk management.Warren Buffet's two rules of | | | | trading strategy.Once this amount is determined, this |
| investing are:1. Never lose money and2. Never forget | | | | percentage must be translated into an absolute value |
| rule number 1!Paul Tudor Jones says that he is always | | | | and stop loss orders must be placed once a trade is |
| thinking about losing money as opposed to making | | | | entered in order to control potential losses at this |
| money. He does not focus on making money; he is | | | | value.There is no guarantee that such efforts will |
| focusing on protecting what he has!Jim Rogers, who | | | | control your losses, since the market can gap in price |
| for years was a partner with legendary hedge fund | | | | beyond your stop loss order, resulting in losses |
| investor George Soros, said "My basic advice is don't | | | | greater than planned.Ioannis - Evangelos C. Haramis |
| lose money!"Bernard Baruch, the renowned investor | | | | was born in Greece in 1951 and he studied in Greece, |
| from the first half of the 20th century advised | | | | USA 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 | | | | |