You can place winning trades all day long.
But if you don’t manage your risk properly, you will not achieve long-term profitability.
Here’s how to protect your capital using 5 lessons from Larry Williams:
1/ The Invisible Shield of Trading
Protecting your wealth is the key to longevity
– Set dynamic stops tailored to each trade
– Size positions based on individual risk
– Use leverage with extreme caution
Don’t blow up your account. Simple as that.
2/ Risk-Reward: Your Trading Compass
Smart traders always know their potential gain vs loss
– Evaluate risk-reward before every entry
– Aim for significantly favourable ratios
– Use data to inform your assessments
If the juice ain’t worth the squeeze, walk away.
3/ Diversification: Not Just for Stocks
Spreading your bets isn’t boring, it’s brilliant
– Mix up your trading strategies
– Blend different assets and timeframes
– Regularly tweak your approach
Keep your trading portfolio as colorful as your socks.
4/ Technical Indicators: Your Risk Radar
They’re not crystal balls, but they’re close
– Use the Average True Range (ATR) to gauge market volatility
– Employ moving averages for trend confirmation
– Candlestick patterns for entry identification
Let the charts whisper their secrets to you.
5/ The Art of Portfolio Housekeeping
Regular check-ups keep your trades in shape
– Schedule time for portfolio reviews
– Assess how well you’re managing risk
– Rebalance to stay on track
Treat your portfolio like a high-maintenance plant.
To learn more about How you can Start Trading for a living, sign up below for my Free Training on the “7-Steps to Financial Freedom through Trading”.
