The sixth commandment of profitable trading is to reduce your risk. If you think you should be risking this much, you probably should be risking that much. The ideal amount to risk on a trade is usually far less than you think because unforeseen events happen. Crazy things happen in the stock market. Markets crash and stocks have bad announcements and earnings, and sometimes there are bankruptcies and all sorts of things. Therefore, you’ve got to trade with very low risks so that none of those crazy things helps you survive, stay in the game, and make long-term money. Thus, reduce your risk even less than you think it should be.
It’s one part of my complete guide to how to learn stock trading.
If you want a tested, rules-based way to trade instead of guesswork, that’s what I teach in the Trader Success System.
More of the 10 Commandments
- The 10 Commandments for Profitable Stock Trading
- 1st Commandment: Learn the Language
- 3rd Commandment: Personalize Your Approach
- 5th Commandment: Preserve Your Capital
- 10th Commandment: Aim for Good, Not Perfect
- 2nd Commandment: Use a System
- 7th Commandment: Write Your Trading Plan
- 8th Commandment: Diversify Multiple Ways
- 9th Commandment: Eliminate Mistakes
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