
Knowing Your Risk Tolerance
One of the most important parts of any trading system is the ability to survive losses. The reality is no matter how good of a trader you are, there will be times when you take a couple losses in a row. This is just a simple fact of life when trading. The successful trader will have a defined risk tolerance and will stick to it. If the system that you are using has a well-defined risk component, it helps smooth out the equity curve as well as the emotional roller coaster that can come with trading. Also, if you are not willing to stick to your defined risk tolerance, you may find that a couple losing trades may evaporate more of your account than you are willing to part with. Once your risk tolerance is established, it becomes a vital part of your system, helping with fear and greed. Let’sRead More →