Managing Risk as a trader is the most important consideration and if you answer NO to any of the following questions, then STOP TRADING until you can answer YES to all of them:

• Do you have a written trading plan that deals with risk management?
• Have you calculated the risk that you are comfortable with in every trade?
• Will you not place a trade, even though you have a healthy balance in your trading account, when you know that your risk exposure goes beyond the risk outlined in your trading plan?
• Have you identified what your maximum position size will be?
• Do you have a stop in place every time you trade?
• Are you aware that risk management is not just about where you place your stop?
• Will you be able to stick to your risk management rules under ALL trading conditions?

There are many ways to manage your risk but until you have a risk management process written into your trading plan and you stick to these risk management rules on EVERY occasion, then you have more work to do until you are on your way to being a successful trader. (more…)