Better profits with smaller bets

We offer you an interview with longtime trader on Wall Street, Jeff White.

By consideration of potential losses against the potential gains, traders can choose the most advantageous ratio between risk and return that protects the capital on the one hand and on the other increases confidence.

Jeff, many people today talk about risk management, but what exactly does that mean the market for a trader? How do you do this?

Yes, this is quite an interesting question. Market required to take a risk to get a return, so I guess everyone understands that there is an element of risk in trading on financial markets, but what is more important, it is not necessary to be high risk trader to do well .

The market is important to develop initial thinking and mentality to survive, and then to develop a mentality aimed at profits. Your initial goals should be directed to the trade in small volumes to be able to withstand the impact of the market when you're wrong. This will keep you in the game and allow you to take the new opportunities that will emerge, and then we can focus on profits.

Most traders focus in the beginning on "How can I earn from this trade" rather than ask themselves: "Can I manage successfully deal?" Everybody is talking about placing stop loss and adherence to him with the necessary discipline. Of course this is just a part of things, but I have to do more to manage risk and to place this stop?

I think there is. As traders should approach each deal with understanding and accurate idea where will be your stop. I personally trade on methods of technical analysis, so watching the chart I want to know where the trend will show weakness and where will fail. Where will model for trend reversal. I want to know what level I have to leave the transaction.

It is important also to be treated with a suitable volume of transaction accounts. I want to know in advance what loss can not take and how can I lose during this transaction to have significant capital to accomplish his next deal.

Many traders say that they want to risk a fixed amount from their account for a specific transaction. What can you advise to those traders who want to ask you how much money to risk in a edinstavena deal.

I think it's good to have a preliminary maximum volume loss, this volume can be changed from time to time based on how good are the results from trading. This can be from 1% The Account may be 0,5%, but this varies, and will be different because of the risk tolerance of each trader - ie to what extent will feel comfortable during the transaction. Many traders when opening position means that you need to protect capital, but many forget that they also need to protect themselves and their confidence in the whole time.

I know many traders who lose confidence in themselves before they lose their capital, so it is very important to keep trade considering that way you will have bad trades.

Keeping their positions small you can withstand the losses that are an integral part of the game, but this way you can continue ahead.

If you have three or four successive transactions in which I was on the right track, I need you to do four or five, because that it can be one that will bring change?

Absolutely. Really good correlation between risk / return, gives this opportunity to take losses in a row and a profitable deal to erase small losses. I think the goal should not be aimed at making more accurate transactions, and to this to win more when I'm right and lose less when I'm in the wrong direction.