Three Super Easy Ways To Control Risk Exposure

No. It is not the first time we speak about risks and most probably not the last one. But believe it or not, talking about risks is a possible thing to do. Especially when the vast majority of traders continues to lose most of their capital for simply not caring enough about them.

That is exactly why we have decided to share three key points that will help you control risk exposure from scratch, protecting your investments in a better way and becoming more serious and professional in trading. Yeap... because only an inexperienced trader would ignore risks.

But before we move forward, a few useful disclaimers for you to consider:

• Controlling risks will not make them disappear completely
• Lowering your risk exposure does not mean your portfolio is conservative
• There are times when markets are simply unpredictable
• Reducing risks could significantly improve your health

Let’s start with the things we can ACTUALLY control and then continue with those that we can limit, but not necessarily control. Trust us, this 5-minute text could make the difference.

1 - Keep an eye on the size of your positions

First of all, are you aware of how much are you risking of your total portfolio per position? Right… Second, do you understand larger positions mean higher risks for losses?

Enough for a good start. Your position size speaks about how confident you are about a trade moving up or down and your confidence cannot be backed on you “feeling that way” but on real analysis.

2 - Unlimited positions, no more!

Leaving a position open for an unlimited period of time is a REALLY risky thing to do. Basically, you are letting it be overexposed to different market conditions with no goal ahead. Worth it?

Set a timeframe and stick to it, even if it means losing some cash. Discipline yourself and then your positions. Adjust stop loss for events that could take place within your selected timeframe.

3 - Set Stop Loss and hold on to them

I know precisely what are you think and NO, you are not right. Stop loss (if set correctly) should not limit your capability to make money.

The thing is… most people set them either extremely far from the price, leaving too much margin for losses, or dangerously close, leaving no margin for normal volatility.

Fort Financial Services