Every trader wants to know how to manage risk on one specific trade. Here are some easy-to-implement suggestions to get your risk under control:
• Know how much you are willing to lose before you execute trades.
• See if the stock is sufficiently liquid (active) should you wish to buy or sell promptly.
• Determine the cut-loss level before trading.
• Determine your profit target (take-profit-level).
• Buy the stock only at an acceptable price level. Use a limit order when you buy a stock.
• Immediately after the trade has been confirmed, enter the stop-loss-at-market order at your predetermined stop-loss level.
• If the trade starts to win significantly, raise the stop level so that your winner will never become a loser.
• Take profit promptly as the trade reaches your profit target.
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