Home Learn Articles Chat room
  Order types: stop, stop-limit, trailing-stop

Don't be a gambler

Stay up-to-date

Don't miss new content and revisions.

We don't spam nor share e-mails

Chat with our community!

Join our community chatroom: join the #thetradingdojo:matrix.org room on the app!

Created with Sketch. Get it on F-Droid. Download on the App Store.

On desktops:
Launch now on your browser

Sadly, most people ignore risk management methods. Maybe it's because it sounds boring, but surely it is because they are in the middle of a bullrun, and that for some (illogical, emotional) reasons they think it's gonna rise for ever. What goes up must come down (and vice-versa).

“B-b-but, look at Amazon, it IS rising since forever!”

No.
Amazon did -95% between 2000 and 2002, -60% in 2008, and regularly does -30%.

Indeed it always recovered. But not all coins are gonna react like Amazon. Many died.
And even, would you enjoy watching passively like a victim, your bankroll sinking and sinking for years? No, this is stupid.
This is a waste of time, money, and possible gains.

“I can take -30% and wait a month or two before it starts going up again”

First, taking -30% is, like I said, a waste of time, money, and gains.
Why not shorting it, and then get again in the bulltrend with even more money?

Next, you don't know if it will be -30% or -95%, nor how long it will last.

Not acting when seeing a reversal is stupid.
Basing your strategy on hope, or luck, is stupid.

Don't be a gambler, be a trader: use risk management techniques Don't use the market as a slot machine

You are not here to make bets.
You are here to beat the market.
You are here to beat the market over the years.
You won't pray gods to make the bullrun last forever.
You won't let the market take all your money back once the trend goes south-way.

Maths are against you

“I can regularly do +30%, so it's okay if I take -30%”

Nah.

-30% on $10,000 results in $7000.
+30% on $7000 does not result into $10,000.

Sad truth heh?
This is another reason why you should never neglect risk managements.

Comments

Should you have any question or remark, feel free to post it. I will answer you as soon as possible!


I want to receive cool and useful mails from The Trading Dojo
We don't spam nor share e-mails

  Order types: stop, stop-limit, trailing-stop