Risk/Reward Ratio

Capital Management – Risk/Reward Ratio

Today we conclude the Capital Management series by discussing point number 4; Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering Professional traders spend more time thinking about how a trade could…

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Position sizing

Capital Management – Position Sizing

Today we look at step three of our series on capital management Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering Calculating your position size is probably the easiest step in the process, but still a…

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Identifying your stop price

Capital Management – Identifying Your Stop Price

This article covers Step 2 in the Capital Management process; Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering When people first come to the market, the biggest question is ‘which stocks to buy’. So much…

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Capital Management – Risk Sizing

  Here are the four steps we have outlined previously regarding Capital Management. Below we will cover the first one in more detail. Determine your risk sizing Identify your stop price or where you will exit if the trade goes against you Calculate your position size Examine the risk/reward profile of the trade before entering Capital management is a crucial…

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Discipline and consistency

Consistency and Discipline

For me, consistency and discipline are two closely related character traits that are essential if you are to be a successful trader (or investor). Trading is about analysing data and making decisions. Each time you buy or sell a financial instrument you are making a decision, informed or otherwise, about the prospects for that particular financial…

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expectations keep going up

Expectations

Expectation can be a killer. Without getting too philosophical, high and unrealistic expectations lead to disappointment. High expectations by themself are fine but when we add in unrealistic, that’s when they can do more harm than good. In the trading game, it’s no different. Tempered expectations will keep us grounded. Unrealistic expectations will lead to…

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Hour Glass

Patience and Impatience

Our dive into ‘Mindset’ continues as we look at the virtue of patience – something traders often lack. Impatience is one of the biggest demons I have fought throughout my trading career and, I believe, one of the major factors which can hurt traders both mentally and financially. The recent rally and pullback in the ASX…

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Stock Price Mindset

The Importance of Your Mindset

There are three main elements to trading that must be understood and worked on if you want to be successful. Some people, including my first trading mentor Stuart Mcphee, refer to them as the 3M’s – Money, Method, Mind. ‘Money’ really means money management, i.e. how to calculate risk, how to size your positions, understanding…

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Don't overtrade

Overtrading – Don’t Do It

Today I am going to talk to you about overtrading. Perhaps an odd place to start and for those who are experienced, it’s probably something you’ve already come to grips with. For novice traders, and even for those who are more experienced, overtrading can be an absolute killer. There are two reasons why. Firstly, it…

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