Typically when a trader or property investor enters the market for the first time they start thinking about how much money they will make.
The only constant in markets is risk.
Despite the current vogue in stock market advertising, there is no such thing as a risk-less trade.
Markets only operate because of the risk reward equation.
No risk, no reward.
Risk can never be eliminated, only managed.
Professionals have always known this and it is reflected in the approach they take which is not to make money but to minimize the amount they can possibly lose.
This is why the first two questions I posed relate to position sizing and exit triggers.
These two elements ensure a trader’s survival when a trade goes wrong.
As such they are the most important questions in trading.
It’s interesting the things we say to ourselves about risk.
If you become aware of your internal self-talk, you’ll be surprised at the things you are actually indoctrinating yourself with.
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