Risk management has to be integral part of your trading strategy | stockbee

1/07/2016

Risk management has to be integral part of your trading strategy

Risk management has to be integral part of your trading strategy if you want to make money in the market. It is not something you can think of when market is weak and you are caught unprepared. You have to proactively manage risk.

Every trader who prospers in long run has developed some kind of market timing model to avoid risky periods and to push the pedal in good times. 

Absent that you can spend lot of time just recovering from drawdown. Once you have risk under control and no losing years compounding can work wonders compared to traders who go through boom and burst cycles. 

One of the key lesson I learned in last 15 years of profitable trading is to proactively identify risky periods and reduce risk before it becomes an issue. That is why I have not had negative year in 15 years and have multiplied original starting capital multi fold. 


There is no glory in blowing up account and then coming back. It is waste of opportunity as in that time you could have grown the account more if you did not have loss in first place. 


If you are serious about making money trading develop your own market timing model. There are many ways to do that but first you need to prioritize risk management.


Our market timing model has been bearish for sometime so not at all dented by this carnage. Watching the fun now for possible rebound in near future. 

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