The Cornerstones of Risk Management in Stock Trading
Every successful business will carry certain degree of risk and therefore all businesses need planning for risk management. Stock trading is also a type of business and here is how it one can manage risk while dealing in stocks. The first step to managing risk is to cover your monthly expenses and then focus on attaining steady growth in earnings.
Instead of looking for a big hit, work on protecting the capital and then look for consistent returns after that take aggressive approach for profit making. Although big hits will continue to come but they won’t come without some risk.
The philosophy of your stock trading business should be based on three major principles. Those principles are stated below in the order of their criticality.
· The first principle is preservation of capital. It will lead to consistent profit
· The second principle is working on consistent profitability
· Then work on the pursuit of superior returns.
Before asking yourself how you can make profits, you need ask what the various scenarios are in which I could potentially suffer losses. This is the smart way of managing risk in stock trading.
There are various risk management systems that one can deploy. Dragon Holdings AG specialize in developing those systems. The company is based in Germany and a part of Niraj Goel’s Clone Algo Group.