Techniques to Control risk and Increase Safety

  • Before taking a position, know the amount you are willing to lose. -Marty Schwartz
  • If a stock drops 7% below my purchase price, I will automatically sell at the market–no second guessing, no hesitation.  -William O’Neil
  • You should always have a worst case point.  The only choice should be to get out quicker. -Richard Dennis
  • I have a mental stop.  If it hits that number, I am out no matter what. -Paul Tudor Jones
  • Combine that long-term objective with a protective stop that you move as the position goes your way. -Gary Bielfeldt
  • I set protective stops at the same time I enter a trade.  I normally move these stops to lock in a profit as the trend continues.  -Ed Seykota
  • Risk management is the most important thing to be well understood.  Under-trade, under-trade, under-trade is my second piece of advice.  Whatever you think your position ought to be, cut it at least in half.  My experience with novice traders is that they trade three to five times too big. -Bruce Kovner
  • Why risk everything on one trade?  why not make your life a pursuit of happiness rather than a pursuit of pain? -Paul Tudor Jones
  • Never risk more than 1% of your total equity on any one trade.  By risking 1% I am indifferent to any individual trade.  Keeping your risk small and constant is absolutely critical. -Larry Hite
  • The key is to lose the least amount of money when you are wrong. -William O’Neil
  • You have to minimize your losses and try to preserve capital for those few instances where you can make a lot in a very short period of time.  What you can’t afford to do is throw away your capital on suboptimal trades. -Richard Dennis
  • Most traders have a tendency to take risks that are too large at the beginning.  They tend not to be selective enough when they take risks. – Gary Bielfeldt
  • The object is always to minimize your risk. -Tom Baldwin
  • No matter what happens, I know my worst case.  My loss is always limited. -Tony Saliba
  • You might have a low-risk trade, but if you are afraid, you probably will not take it.


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