How does professional trader trade in the market? Professional Trading ! Risk Management

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Risk management

vs
Accuracy (luck)

 

Why risk management overrule above all trading strategies???

Why does risk management overrule all charts, patterns and indicators in the stock market???

What risk management actually is???

How does it apply in live trading???


 So many questions are there…and the answer is-

Mindset > Strategy !

"Market rewards you only when, you stick to your logic..even if market is against to you"

 

 Let's understand with my practical experience..

I was trading in market on the basis of my trading style ( it can be any style how you trade in the market ). I preferred to take only those trades where my Stop Loss and Target Price ratio would be 1:3

First Scenario (Risk Management)

Trade 1: - 1,000
Trade 2: - 500
Trade 3: - 300
Trade 4: - 200
Trade 5: + 2,500

In this scenario I earned +500 pts

Here my accuracy was 20% (unlucky) still I earned +500 pts.

Second scenario (No Risk Management)

Trade 1: +700
Trade 2: +400
Trade 3: +550
Trade 4: +600
Trade 5: -3,000

Here my accuracy was 80% (lucky)still I was losing -750 pts.

This is risk management and that denotes why it is a professional game. It is not all about how lucky or unlucky you are, it is all about how efficiently you manage risk well.


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