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3 ways to manage Risk in Stock Market

Posted By On 5/25/2009 12:11:00 AM Under
1. As an online stock market trader or commodities trader one has to understand that to make money from these markets one has to be a long term player and for that one has to be in the game for the long term. It is to be remembered that one can stay in game only if one is able to undertake risk Management methodically as it is the single most important aspect in trading, regardless of style or technical strategy.

2. One can state Risk Management as a means to avoid loss control and in stock market parlance one can call it as the constant modulation of Risk Exposure to a constantly changing market. All will say that in trading they use stop losses, however one has to go a step ahead of this as using stop los only is like saying that "I am safe in my car because I have brakes." Needless to say, the "brakes" are only part of an entire system of managing risk in a constantly moving environment such as street traffic. Thus we can call markets as the streets. A number of methods exist for safe driving like using steering, controlling the throttle, the path you take, "your trip preparation," mapping your route, the times you drive, the amount of driving you do, not driving while "under the influence,". Thus we can not say that stop loss is the only means of managing risk as it is just akin to the brakes.

3 ways to Manage Risk in Stock Market
4. One can modulate the risk by executing the position of the trade as per an individual financial capability, can execute lesser number of trades as atleast one will be saving on brokerage and last but not least is to have a longer duration of investment.

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