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How To Become A Stock Speculator With Minimal Losses.. Here Are The Expert Tips

 Trading on local or international stock exchanges requires the investor to be familiar with many skills so that he can make profits or stop losses if exposed to it.

One of the most important basics that an investor or a stock speculator needs to learn is risk management and the diversity of investments.

The well-known American website "Investopedia" published an article explaining the essential elements that an investor should learn on the stock exchange to manage risks.

You should not put more than 1% of your capital in one trade as this greatly reduces the amount of risk you may be exposed to

One of the most important elements that a successful investor should pay attention to is to avoid mistakes that many speculators make, such as buying shares for more than you can afford.

And the money markets of all kinds contain a large degree of risk, so the size of the purchase should be calculated and do not invest with all your money so as not to be surprised by an unexpected emergency change and the index drops unexpectedly or any personal incident that forces you to withdraw a quantity of your money and here you will inevitably suffer a huge loss and the main reason will be that you did not determine the appropriate position for your purchase of shares and determine the size of the loss that you can bear before you start.


How to manage trading risk?

One of the most important steps to start with is to identify the most important factors or risks to which you can be exposed.

Identifying these risks will make you think about developing a backup plan, which will give you the ability to act if these risks turn into reality.

You should also consider the political risks that often negatively affect the financial markets and stock speculation.

Rule 1%

In short, this rule says that you should not put more than 1% of your capital in one trade, as this greatly reduces the amount of risk that you may be exposed to.

Center size

According to the 1% rule, if you have a thousand dollars in your account, you should not put more than 10 dollars per position.

The key to making a profit when applying the 1% rule lies in the number of winning trades, not their individual amount.

For example, aim to make 5 winning trades where you risk 1% on each position, instead of one winning trade, where you risk 5% of your capital.

In the long run, this has better chances of making profits and preventing large losses.

Some traders modify this rule by increasing its high limit to 2%. However, this is usually not recommended if you are a beginner or a trader who is still building and testing his own risk management strategy.

Take-profit orders are used in combination with stop-loss orders. In this way, a trader can ensure full control over his open financial positions

Use stop loss

The idea boils down to setting a stop loss limit, and a stop loss will enable you to control the amount you are likely to lose on any trade.

Stop loss limits are applied by specific orders to place a mechanism that sells your assets as soon as they reach a certain price level. If the stock price stays above it, the stop loss limit will not be triggered, and your position will remain open. With stop loss limits, traders can automatically close positions when the market turns against them.

Use take profit orders

It is imperative that you commit yourself to set take profit points to close open positions.

It is better if this is done non-manually so that if the specified price level is not reached, take profit orders will not be triggered, which are very similar to stop loss orders, in the sense that they allow you to close your position when the predetermined conditions are met.

Take-profit orders are often used in combination with stop-loss orders. In this way, the trader can ensure full control over his open financial positions.


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