By
Online Guru Trader
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Blog ,
Trading Article
Most investors and traders I have met so far told me that investing and trading the financial markets are risky. The main reason for this is that they do not know what happens into the future regarding their trades or investments. They do not know the unknown (the risks involved) and that is the main reason for them feeling it’s risky. My advice to this group of investors and traders is to stop investing and trading immediately and educate themselves further to the point they know what to expect into the future, before they start to invest and trade again.
I know what to expect into the future whenever I enter into a trade. I do know the unknown and that’s why I feel it’s safe to trade. There is still some risk involved but it is calculated risk. Calculated risk to the point I feel it is safe. To understand this, let me quote you an example. Take skydiving for an example. If you never skydive in your life before, you will feel it to be risky to skydive. But if you attend a skydive course and learn the steps, techniques, procedures and the risk of mishaps happening and how to react and resolve the mishaps in midair if they do happen. You would have known the unknown and would feel safe enough and confident to do it. It’s the same in driving as well. Drivers feel it is safe enough for them to take the wheels because they know of the unknown and the risk of mishaps and how to react to them if such mishaps do happen.
In trading, I feel it is safe enough and I know the unknown to trade. Here is what I mean. Whenever I go into a trade, I know the few scenarios that will happen and how to react to them into the future. There is only 3 main scenarios that will happen. Either the price will go sideways, up or down. I put a stop loss level which if the price reaches my stop loss level, I will exit the trade with the losses. In this way, I already know beforehand how much I am going to lose. And I make sure the amount I am going to lose is an amount I can afford to lose. This amount is an amount which I don’t feel a pinch or heartache even if I lose it. I have a target level to take profit as well. If price reaches that level, I will exit the trade with the profits. If it goes sideways, I may hold the trade longer or I may exit the trade with no or slight losses or profits.
Like I said earlier, some investors and traders don’t do this and they experienced losses that they do not expect of. That is the main reason for them thinking investing and trading is risky. And it is due to ignorance, lack of knowledge and mainly not knowing the unknown (the risk involved). Knowing the unknown or risk involved can be achieved simply by implementing and doing up a trading or investment plan. With a trading/investment plan, one will be able to know how much he is risking and to consider if that amount is an amount he or she is comfortable with. The mindset of being safe is important to trading and also important to every venture we engage ourselves into, through life itself. To learn more about the mindsets and psychology you need for trading, register and attend my last few free seminars for the year at https://www.onlinegurutrader.com/free-seminar/