Calculated risk-taking is defined as the skill of making decisions based on incomplete information and unknown future.
The skill requires the ability to act decisively based on all options available while filtering the decision making through the process of risk management
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Calculated risk questions:
1. What will be gained if maximum success is achieved?
2. What will be lost in the worst case scenario?
3. What is the risk/reward ratio on this bet?
4. What is the probability of success?
5. What are the consequences of failure?
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6. What are the odds of the risk of ruin?
7. How will I know the attempt failed?
8. When will I know that the attempt failed?
9. What lesson will I learn through the results either way?
10. What long-term damage could the attempt do?
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11. How many times do I have to try for a high probability of success?
12. How many times can I attempt to succeed?
Shared by Steve Burns
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Losses is a part and parcel of trading. The trick here is to be able to limit your losses and find the appropriate money managing strategies to suit a situation.
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Money management not a guarantee of sure fire success and high profits but is an assurance against mounting losses in a difficult market. At the same time you need to keep an eye on the volatility of the stock and how much money needs to be put at risk on any one position
You shouldn’t be concerned about portfolio returns every now and then. Of course you have to check at some times, But looking at your portfolio returns too often can be detrimental too.
In a market crisis, negative news causes anxiety and fear. In such times looking at the falling value of your portfolio can only add to that anxiety.
The opposite happens when the market is rallying; you feel like you have made all the right choices.
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You can’t really compare the portfolio return to your return objective on a daily basis, because your goal is likely to be unchanged for a while. Hence, a daily comparison says nothing about whether your portfolio will be able to achieve what it has been set to do.
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Our elders often use stories and incidents from Ramayana to show us the right path in life. But epic Ramayana can be equally valuable in learning lessons on #investment and financial planning.
Ram chased the golden deer & Laxman also went out. But before leaving Sita in jungle, Lakshman drew a line and requested Sita not to cross that line. But then Ravan arrived as a saint trapped Sita to cross the line, and kidnapped her.
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The lesson here is not to chase anything and everything that looks attractive. Today many investors are getting lured into #investing in direct stocks based on hot tips cryptocurrencies, covered bonds, and so on that promise them the moon.
It is important to remain calm and not overreact to the market. You can’t predict what will happen with your trades.
So try to stay positive even when things aren’t going as planned. This way its easier for your emotions not to get in the way of your trades.
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Always Have a Strategy
In trading it’s essential to always have a solid plan in place.
It is never easy knowing what will happen next, so stay positive and not focus too much on the short-term nature. Always be prepared with your strategies for whatever may come up!
Let’s explore 12 qualities that good traders have, knowingly or unknowingly these qualities are the reason they thrive in the market and are net-profitable in the long term, while others lose their shirt sooner or later
We don’t know when trading losses are going to hit us. Good traders understand this, and they know that managing risk not only preserves their capital, it also protects their emotional well-being.
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#2- Good Traders Know How To Manage Their Emotions
Good traders understand how their emotions can influence their trading performance. They have mindset management routines like mindfulness, physical exercise, or journaling.