Is Trading Risky?

How risky is trading? Is it something that only a few people will ever be able to do, or is it something that anyone can do?

Well anytime you are getting into a stock position you are risking money. There isn’t a way around this simple fact.

There are many market participants that are realizing buying for the long term might not be as risk free as they initially thought. If you would have bought stocks 10 years ago you would still be around break even. If you would have bought less time than that you might even be in a world of hurt right now. In other countries like Japan the notion of buy and hold is gone thanks to their major index hitting a 26 year low.

That is just how it works. Anytime you enter a position you are betting that the stock will go in a given direction within a specific amount of time. Without that risk there is no gain to be made.

But it isn’t just a random “put all your money on black” game, risk can be controlled. It isn’t simply you buy a stock option and hold onto it hoping it goes up. No to be successful you really do need to have some sort of stop loss on your position. By keeping a stop loss on your position you realize that you can lose money, but you are keeping the amount you can lose very small compared to the amount you can win.

Being aware of the dangers and cutting any losses you may have allows us to trade the markets with all of the risk that is involved and still be profitable. So yes
it is risky, but that doesn’t mean you cannot be consistently profitable.

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