What is risk management?

We are constantly managing risks throughout our lives - either during simple tasks (such as driving a car) or when making new insurance or medical plans. In essence, risk management is all about assessing and reacting to risks.

Most of us manage them unconsciously during everyday activities. But, when it comes to financial markets and business administration, assessing risks is a crucial and very conscious practice.

1. Setting objectives
The first step is to define what are the main goals. It is often related to the risk tolerance of the company or individual. In other words, how much risk they are willing to take to move toward their goals.

2. Identifying risks
The second step involves detecting and defining what the potential risks are. It aims to reveal all sorts of events that may cause negative effects. In the business environment, this step may also provide insightful information that isn’t directly related to financial risks.

2. Risk assessment
After identifying the risks, the next step is to evaluate their expected frequency and severity. The risks are then ranked in order of importance, which facilitates the creation or adoption of an appropriate response.

4. Defining Probability
The fourth step consists of defining responses for each type of risk, according to their level of importance. It establishes what is the action to be taken in case an unfavorable event occurs.

5. Monitoring
The final step of a risk management strategy is to monitor its efficiency in response to events. This often requires a continuous collection and analysis of data.

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Last 3 posts are chart patterns that signify a REVERSAL in trend

Trading Advice

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1: Do not open more positions than you can comfortably handle

2: Do not go "all in" on a single position

3: Keep your risk % low, slowly growing your gains is far more enjoyable than watching them get wiped out during a period of volatility

4: IMMEDIATLELY set your Stop Loss order after opening your position; move it to be in profit after each leg up (or leg down if you are shorting)

5: You WILL LOSE trades; accept when you have made a bad entry and resist the urge to hold on for it to "turn around"; better to deploy the capital again on a winner

6: ALWAYS do your own "chart check" to avoid making an entry at a time that most are preparing to take profit

7: Secure your gains if price moves BEYOND your original target; the price has already exceeded your expectations and is bound to reverse

8: Keep a trading journal to track gains/losses, as well as notes for each trade that detail why you entered and why you exited

9: Learn basic charting skills; Moving Averages and Fibonacci Retracements are relatively simple to learn and apply

10: PLAN your TRADE, and then dutifully TRADE your PLAN