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When it comes to trading, many people believe that the most important skill that can be achieved it consists of earning morewhen in reality (according to the most experienced traders) is in not losing what you already have. After all, even Warren Buffett, the third richest man in the world and an icon of the investment world, believes that the number one rule as a trader is to never lose money.
This article is a collection of 8 quotes from the most reputable investors, which could help you better understand the nature of financial risks and manage your losses. These are important information, as they could help you stay in the game when everything seems to be against you (because, as you know, you could lose all your money and your trading would suddenly end).
"I always thought about losing money as opposed to making money. Do not focus on earning, concentrate on protecting what you have. "
– Paul Tudor Jones
"The elements of good trading are: (1) cut losses, (2) cut losses and (3) cut losses. If you can follow these three rules, you might have a chance. "
– Ed Seykota
"You must learn how to lose; it's more important than learning to win. "
– Mark Weinstein
"I do not think you can consistently be a winning trader if you try to be right over 50% of the time. You have to figure out how to make money only 20 to 30 percent of the time being right. "
– Bill Lipschutz
"In the course of my financial career I have continuously witnessed examples of people ruined by the failure to respect the risks. If you do not carefully watch the risk, the risk will hit you. "
– Larry Hite
"Letting losses is the most serious mistake made by most investors."
– William O'Neil
"When I'm hit on the market, I go out immediately. It does not matter what market it is. I simply go out, because I believe that once you get hit on the market, your decisions will be much less objective than when things are going well … If you stay when the market is clear against you, sooner or later it will get you out. "
– Randy McKay
"When I became a winner, I said, I got it, but if I went wrong, I want to save my money and move on to the next operation."
– Marty Schwartz
The above quotations may seem intimidating, however it is important to grasp the concept of risk management and put it to good use. When a group of highly professional and successful traders underlines the importance of risk management, they probably think it seriously. How to follow these principles on a more practical level? For example, not investing more than 2% of its capital in a single operation and closing positions at a loss. You might also find this article interesting, on situations where the trend is directed against you.
This article does not represent an investment advice. Any reference to past movements or price levels is informative and based on external analyzes, we do not provide any guarantee that such movements or levels may reoccur in the future. In accordance with the requirements set by the European Securities and Markets Authority (ESMA), trading with binary and digital options is only available to customers categorized as professional clients.
GENERAL INFORMATION ON RISKS:
CFDs are complex instruments and carry the high risk of losing money quickly due to the leverage effect. 76% of retail investor accounts lose money when trading with CFD through this provider. You should make sure you understand how CFDs work and if you can afford to take the high risk of losing your money.
Source: IQOption blog 2018-11-14 12:53:34