I was watching a financial network on TV today and heard the anchor say, “Good news for investors in Zynga, the shares are up over eight percent today!” A little later she muttered almost under her breath, “But the shares are still down over 60% year to date.”
I do not mean to downplay the recent gains in the equity markets. There have definitely been profits to be made. The announcer’s comments just reminded me about how important money and risk management are to the financial survival of a trader or investor.
Losses are the only thing within your control when you enter the markets. You may have done your research and planned the trade, but no one can know with 100% certainty whether the markets will move up or down and how soon. So when you enter a trade, you decide several factors that will tell you if you are likely to lose and if so how much.
The market environment – Are you trading with or against the broad market?
The stock’s… Continue Reading
