How to do Risk Management In the various markets: A simple mathod for managment

Risk management is a process that identifies, assesses, and controls threats posed to the capital or estimated profit return in the trade.

Trading is not complicated but constancy is very hard in the market. On a regular base, you face many problems during trading. In that problem, Risk is the main because many traders don’t know how the traders can manage their risk.

Every investment in the market involves some risk, which is uncertain. We can’t predict but we can manage it. Risk is two types: systematic risk and second is unsystematic risk. Before jumping into any trade you must be aware of your risk.

How to do risk Management

You know in our life we are going at absolute risk. We don’t know when our breath will stop. In the same way, the risk is uncertain in the stock market. But we can manage it through our risk management. Loss is part of the game but when we get a huge loss then it is not controllable, Because we always thought about the cover it as soon as possible.

Once you manage your risk then you are the master of the stock or any various market. The trouble is the first setup of the trading.

Measure Your Risk Beforehand

Risk management is not a cup of tea. Before jumping into trading you must have a plan on how you can control your risk. If you don’t have an idea how you control your risk while trading then maybe you survive for a long time In the stock market

Before taking the trade you measure your risk in the trade. How much money are you ready to give the market? If you determine everything before taking a trade in the stock market then you will become a successful trader in the market.

Many of the trades don’t like to measure their risk in the market because they are very expert in losing their money in the market. Only that kind of trader can survive in the market they know the risk in the market before taking any trade.

Every trade must be managed in the market. Risk measurement is the main part of trading. If your risk is not managed then the market may be wiped out of your account in some time. The market is always helping traders but unfunny they refuse to take any help provided by the market.

Risk Management is the master program of the trading journey. On this trip, you must know about your destination and you have a road map while trawling in trading. So you must have a blueprint for risk management and trade management.

Schedule your trading plan and work according to it

This is one of the most important parts of trading life. If you don’t have any plan while trading then maybe success market. The trader must prepare a plan for how he will take the trade, on what setup they will take the trade, what is the stop loss of the trade

Everything must be planned before jumping into the trading trader. Trading is not rocket science you can do it very easily if you follow the rules and regulations of the stock market or any other market.

schedule your trading plan

A trading plan is the blueprint of action. It is helpful to how you can manage yourself while trading and how you can take the trade-in market. The trading plan is very difficult to make but once you are addicted to it then you will prepare it every day before the market opening.

By trading plan, you decide to buy or sell stock and also you can earn a massive amount of profit. The trading plan helps to make a strategy.

How we can prepare a perfect plan for risk management in the stock market?

  • Your Time Horizon
  • Your entry strategy
  • Your exit plan
  • Your Position size
  • Your Trade performance
  • Your Plan B
  • Repeat it until success

Risk Management: Don’t do trade when you have any doubt

Once you have any doubt about when you are going to take the trade. Then stop to take a trade because when you are confused while taking the trade. you must trade when you have a free mind. Never trade until clarification with your confirmed setup.

Doubtful trading is very risky. Whenever you feel doubt while trading then you should not take any trade. Because you feel doubt when you don’t have full confidence. Without confidence, you get a trader after execution in the trade may be you face loss.

When you are dam sure then place the trade in the market. Trading is very hard to do when you have doubts. When you have some doubts then your risk management will not work.

Don’t trade with a big lot: Trade with a small quantity

Always trade with small until you become a perfect trader. Big lot is very risky and it will affect the maintenance of risk management. A big lot means a big loss and profit, you can’t survive for a long time if you just started your trading career.

If you want to play trading games for a long time then you must start with some quantities or some small lots because the heavy quantity or lot size will affect your mindset, psychology, and risk management.

Trading with small lots is a good habit of every successful trader. Because the trader knows how he can manage his loss and risk management while trading. Risk management is very important and necessary for the trader.

do not do big

In the market, every trader knows very well a big lot is bringing big losses. Trading with a big lot is very risky because the new trader has no idea how he can tolerate the volatility. The trader only put the trade when he saw the screenshot of the other trader so that’s why he started to raise the loss in the market.

We know very well this is not a fair method of trading. The good method is to start with trading with some quantities. One more thing is quantities do not matter only quality matters. So you should pay more attention to building up the quality.

Don’t do over-trade: Manage your trade according to your plan

You know the risk management shakes off when you do more and more trading without any setup and condition. Once you start overtrading then maybe you will lose your all control while trading.

Do you know how the emotion comes? The emotion has heavy on you when you are driving in the loss and you are trying to cover your loss without any setup, or entry confirmation. Overtrading is not a good habit it’s a very risky habit for any trader.

If you got a loss from the market and you are not able to cover it then book the loss and wait for the next day. On an upcoming day maybe you found a good setup with perfect risk management.

Traders always should trade within their limits. Because we are not trading for the broker. The mediator will charge it’s the commission the broker does not care about you because the broker fixed his commission. So do not do overtrade.

Know when to close a trade or book a profit

You are going to place your order in the market. They must have known about your Entry and exit point. Many of the are greedy for more profit while the market is giving the profit to the trader. But the trader is not booking the profit.

I’m recommending that you always book your profit when you get your desired profit. Never ever greedy in the market. Because the market does not care about you book the profit.

The exit is more important than the entry. You can enter at any time but your heart to exit. Trading is not for chicken heart people. Closing the trading is also part of risk management.

Prefer going with market trends Don’t fight with market move

The trend is our friend, while the risk management you must know which side the market is following. If you are running behind the market then you will become a perfect trader in some time. Never run against the market otherwise your account will be wiped out in some time

The trend is the first setup of the trader. Every trader has some information on how they can identify the trend of the market. What kind of scenario is currently in the market? Always goes with the market trend. Never trade without confirmation.

Many traders in the market don’t know what is the trend and which side the market is moving on now. They just know how we can trade in the market because they are addicted to trading. If you want to reduce your loss with proper risk management you must follow the trend of the market.

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