A guestpost I wrote for this-is-forex.com.
Check Miad’s site out. Great stuff. Link below.
Risk management is key to trading. Without risk management, you can have the best strategy in the world, slowly grind down an account due to poor risk management.
There are several key principles that I follow with managing risk & managing a position while in a trade.
Firstly, I do not believe in cutting your winners short when your stop is managed with the correct risk parameters. If you take a quantitative based approach to the markets, where you look at your stats over a good sample size, you should have 100% faith in these stats as long as they are robust (have significance with little error/bias) and the conclusion is a positive expectancy. The second you begin to cut losers short, you are applying human impact to your robotic approach. How do you know that your trade would have hit your stop? By cutting it short you are affecting…
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