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DAY 15 - RISK MANAGEMENT IS KEY

alifari Posted 15 July  in #Trader's blog #Risk Management
Markets are ultimately driven by order flow. Even assuming it's possible to know exactly what orders are currently in place, and at what levels (the 'order book', there are always more orders about to be added that traders have no knowledge of. These orders are created by a host of different factors, that are too diverse, complex and abstract (e.g. sentiment) to be calculated precisely.
I recall reading a good anecdote in a Mark Douglas book, that went something like this: A capable analyst wh…
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DAY 19 - RISK MANAGEMENT

alifari Posted 19 May  in #Trader's blog #Risk Management #Trader #Amateur #Professional
Risk Management - Amateur Traders vs Professional Traders
Amateur Traders don't give much importance to risk management. Many of amateur traders are under capitalized, as such they use excessive leverage to achieve their goals resulting in taking higher risk than normal. Majority of them don't place their stop loss beyond a technical price barrier, but use some arbitrary stop-loss, which price doesn't respect very often. They give too much emphasis to an individual trade rather than a series of…
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1 Comments
verindur avatar
verindur 20 May

I worry about risk management here otherwise I have a couple of orders on in different contests targeting top slot. So sometimes its not about risk management its about travelling fast. In fact it turns out to be slow at times.

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Risk Management

alifari Posted 9 Dec.  in #Trader's blog #Risk Management #Amateur #Professional
Risk Management
"Risk management is the most important thing to be well understood"
Amateur Traders don't give much importance to risk management. Many of amateur traders are under capitalized, as such they use excessive leverage to achieve their goals resulting in taking higher risk than normal. Majority of them don't place their stop loss beyond a technical price barrier, but use some arbitrary stop-loss, which market doesn't get respect very often. They give too much emphasis to an individua…
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Illogical Stop Loss Placement

alifari Posted 6 Dec.  in #Trader's blog #Risk Management #Trading Psychology
3. Illogical Stop Loss Placement:
"Trading is not a business of predicting, it is a business that involves hypothesizing and risk management"

It is common practice among novice retail traders to use needlessly wide stop loss due to fear of taking a loss and preserving their win/loss ratio. This fear is commonly caused by lack of knowledge and due to insufficient research and back testing. They don't understand that losses happen and they are part of this business and that there is no place for …
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