The Essence of Risk Management in Trading
Risk management in trading is like wearing a seatbelt while driving. It’s about protecting yourself from unexpected market turns.
Setting Stop-Loss Orders: Your Safety Net
A stop-loss order is an instruction to sell a security when it reaches a certain price, preventing larger losses. It’s like having an automatic brake to stop a falling investment.
Position Sizing and Margin Trading: Playing it Smart
Position sizing means not putting too much money into a single trade. Margin trading involves borrowing money to trade, which can amplify both gains and losses. Both require careful consideration, like balancing the weight on a boat to keep it stable in rough waters.
