vanathi
Education

Trading - Make it easy - Part 7

NSE:CNXMEDIA   NIFTY MEDIA
Its said, "Knowing risk tolerance level is the key to success in trading". Let me explain this with an example. Refer the above chart. Two traders A and B saw double top formation and decided to go short. Trader A used leverage above his risk tolerance level. Trader B took trade as per his money management.
Both traders went short. After few minutes price start to retrace a little. Trader A got emotional. He have risked more and if the trade hit stop loss, his loss will be more. He got panicked. After some time price started to fall. Since trader A was panicked he booked small profit and exit the trade thinking the price will go up again. After few minutes price reached the target and trader A was sad.
Trader B was casual as his risked amount was normal and exit his trade taking full profit. Both traders had same analysis and traded with same plan but did not get same profit. To avoid such mistake, one should remember that, trading is a process. One trade wont make you rich. To carry on the process of trading we should know our risk tolerance level and follow money management.
Join me in telegram to learn & earn. I also post my trades there & live calls. https://t.me/Analysis4Newbie
Follow mw here to learn about system trading. I update my swing trades here. https://neomechanicaltrader.home.blog/

Comments

Very true, i also faced this at initial stage. Thanks for sharing such knowledgeable posts :)
Reply
vanathi rachitstnd
@rachitstnd, Welcome.
Reply
New traders calculate the amount they risked after entering trade only.
Reply
vanathi Harshita2
@Harshita2, True, that is the main reason for them losing money.
Reply
nice simple explanation.
Reply
vanathi gregferns
@gregferns, Thank you :)
Reply
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features Pricing Refer a friend House Rules Help Center Website & Broker Solutions Widgets Charting Solutions Lightweight Charting Library Blog & News Twitter
Profile Profile Settings Account and Billing Refer a friend My Support Tickets Help Center Ideas Published Followers Following Private Messages Chat Sign Out