Meet Victor Sperandeo.
He’s the trader known as “Trader Vic” with a 45-year track record of success.
His risk management strategies helped him to significantly minimize his losses.
Here are 7 of his crucial lessons on managing risk in trading:
– Strive for an optimal balance between risk and reward.
– Use backtesting to predict potential outcomes.
– Ensure each trade offers a favorable risk-reward ratio.
Risk Assessment
– Evaluate risk before placing each trade.
– Use quantitative methods to assess risk levels.
– Adjust your strategies as needed, based on your trade results.
Understanding Market Risks
– Regularly review geopolitical developments impacting markets.
– Analyze different types of market risks: systematic and unsystematic.
– Stay informed on global economic conditions.
Setting Risk Limits
– Define total exposure limits for your portfolio.
– Establish clear risk limits for each trade.
– Stick to these limits rigorously to protect your capital.
Diversification
– Diversify your portfolio to spread and mitigate risks.
– Include a mix of asset classes and sectors.
– Regularly rebalance your portfolio to maintain desired risk levels.
Loss Management
– Develop a plan to handle losses before they occur.
– Implement strict stop-loss orders.
– Learn from losses to refine future risk management strategies.
Leverage Control
– Use leverage prudently to avoid significant losses.
– Understand the implications of leveraged positions.
– Reduce leverage during high volatility or uncertain times.
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”.
