Читать книгу Trading For Dummies - Lita Epstein - Страница 11

Managing your trades so you don’t lose a bunch of money is critical. Although we can’t guarantee that you’ll never lose money, we can provide you with useful strategies for minimizing your losses and getting out before your stock portfolio takes a huge hit. The key is knowing when to hold ’em and when to fold ’em, and we cover that in great detail in Chapter 12.

One thing that we can’t emphasize enough is that you must think of your trading as a business and the stocks that you hold as its inventory. You can’t allow yourself to fall in love with and thereby hang on to a stock out of loyalty. You’ll find it especially hard to admit you’ve made a mistake; nevertheless, you have to bite the bullet and exit the position before you take a huge hit. You’ll discover that housecleaning and developing successful strategies for keeping your inventory current are important parts of managing a trading portfolio.

Setting a target price for exiting a position before ever trading into it is the best way to protect your business from major losses. Stick with those predetermined exit prices and you’ll avoid a major pitfall that many traders face – holding a position too long and losing everything. You obviously don’t want to turn a profit into a loss, so as your position in a stock produces a profit, you can periodically raise your target exit price while continuing to hold the position to ensure that you keep most of that profit.

Understanding your risks – market risks, investment risks, and trading risks – helps you make better trading decisions. We review the different kinds of risks as they relate to specific situations at several points throughout the book.