Avoiding Over-Exposure to Intra-Day Market Risk.

Normal exposure to the market usually refers to the amount you can affordto lose in a single intra-day trade. Overexposure occurs when you’re not prepared for the losses and the emotional distress that follows those losses.

There are a few ways to describe overexposure:

(1)

It can indicate that you’ve purchased too many shares at one time, and you’re not yet used to the swings and the rhythm of the stock.

(2)

It can also mean that you’ve purchased a stock at the wrong time of day, as in pre-market or after-market, and uncertainty is dangerously high.

(3)

Over-exposure will most likely occur if you’re trading stocks that DO NOT meet my stock selection criterion (you will learn how to properly select stocks in lesson 13 of my trading manual).

How to trade in 100 share-blocks successfully.

Trading in 100 share-blocks is the fastest way on learning how to trade consistently and profitably.

By trading in 100 share-blocks per trade, you’ve essentially eliminated any possibility of over-exposing yourself to market risk. Of course you’re also limiting your profitability, but as an amateur it’s more important to being safe then trying to get rich quick.

The key to trading in 100 share-blocks is having a pay-per-share commission structure. Most Direct Market Access (DMA) providers offer such commission structures (you will soon learn all about this). When you use pay-per-share this allows you to place several intra-day 100 share-block trades, and you don’t have to worry about paying $9.99 per trade. When you pay-per-share you can expect to pay between 30-50 cents per trade.

Therefore, in order to trade 100 share-blocks successfully you need to have a pay-per-share broker and the self-discipline to never get a head of yourself and begin trading larger share-blocks per trade.

Tips on avoiding overexposure to market risk.

  • Open an account with a pay-per-share online broker. This allows you to trade in small share-blocks, and thus maintaining low exposure to market risks.
  • Only trade in 100 share-blocks per trade (especially when you’re only an amateur trader).
  • Never try to trade on news and economic reports (don’t try to predict what Wall Street will do).
  • Never trade stocks that don’t pass my stock selection filtering process.
  • Avoid trading in pre-market and after-market hours (especially when you’re only an amateur trader).