Money Management

Money Management

 Position Sizing, Risk Reward, and Stop losses

If you are going to last through the ups and downs of trading for a living or investing for your future sound money management is a MUST! Position sizing, risk reward and measured moves all play a key role in establishing a healthy balanced approach to achieving lasting success.

Putting it all on black is a disaster waiting to happen when you gamble at the roulette table. Putting all your investment dollars in one or two stocks without a game plan is virtually the same type of gamble. Risk appetite and individual goals will play a role in how aggressive or how conservative each individual is with their trading / investment portfolio.

Regardless, the principles of sound money management must be established before entering any trade. You must have a clear understanding of what you are risking, the maximum loss you are willing to accept and the amount of profit you are hoping to obtain. You should have a minimum risk reward scenario of at least two to one. Meaning you are willing to risk losing $100 to make $200 at the very minimum. Ideally you want setups where the risk reward is much higher like 5 to one or more. Having and established plan should help remove the emotion from the trade as long as you are disciplined enough to stick to your trading plan. When evaluating a trade the most important thing to consider is not how much you can make but how much you can lose if the trade goes against you. Always be thinking about the potential worst case scenario.

Holding through an earnings release or FDA event is a binary event that is nearly impossible to assign a risk reward equation to. How do you gauge the risk, potential loss or reward on an event like that? How do you know where the stock will fall too if it’s a huge earnings miss or failed drug? Realistically you don’t, and that makes that trade extremely dangerous.

 I am not saying that you can never hold through earnings or through an FDA event. What I am saying, is use funds that you would assign to your gambling or lottery fund. I often hold what I call lotto shares through events such as these and I will go into more detail later on the concept. What makes people hold through events like these?

Fantasy, hope, and dreams of having the next huge winner that will make them an overnight millionaire. They are afraid that if they don’t hold through the event they will miss the huge opportunity never really considering that it could go the other way. If they focused more on what could go wrong then they would probably adjust the amount they are willing to gamble.

Every individual has their own threshold for risk. You will have to set your risk reward ratios and be disciplined enough to adhere to those ratios.

More to come Soon 
Hey there folks I am running out of my completed material for the work book and will be writing more as time permits. Hopefully what has been posted this far has helped in some small way. Stay tuned for more. 

Stocks on the radar
I have to say yesterday was a fairly decent day for the Bulls in the indices and it would be nice if we could get a follow through day today. 

CYBR IPO continuation, MHR PR last night 6 dolla holla, MNKD active premarket, CREG continuation? china name can be a pop and flopper so be careful , PULS strange action lately keep an eye on it thin one, VHC bottom bounce ?, NPTN breakout watch, HTCH daily sitting on support looking for a bounce, RNN looks like it wants the Dolla Holla, HDSN possible flat top break out daily, VJET on radar like the daily keep an eye on the sector, MNDO nice daily another possible flat top Break out over 3.30 could send it, MPET possible trendline break and the 2 Dolla Holla, IG nice flag daily PR 

IPO'S today 
CNNX,  TVPT

Best of Success 

If you are interested in getting my trades entries and exits REAL TIME for both day trades and swing trades sent to you in email and in text . You can join me @ the Stock Aviator chat room. It is a paid site and if you use this link https://www.stockaviator.com/79-90-a-month-for-premium-membership your first 30 days will be at a discounted price of $79.90. After your initial 30 days it will be $99.00. I recommend trying out the free 14 day trial.

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