Money Management & Risk Control: Learning From The Pros
Do you ask yourself - As a stock trader, how do I make a living trading stock? Well, the best persons to answer that are the pros in the industry. So what do the great traders and investors say?
Money Management
“Don’t bottom fish” - Peter Lynch.
“Don’t try to buy at the bottom or sell at the top” - Bernard Baruch
“I always laugh at people who say “I’ve never met a rich technician” I love that! It’s such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician” - Mary Schwartz.
“Diversify your investments” - John Templeton.
“Diversification is a hedge for ignorance” - William O’Neil.
“I’m more concerned about controlling the downside. Learn to take the losses. The most important thing about making money is not to let your losses get out of hand.” - Marty Schwartz.
“I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have” - Paul Tudor Jones.
“Rule number one of investing is never lose money. Rule number two is never forget rule number 1″ - Warren Buffet.
Risk Control
“If you have an approach that makes money, then money management can make the difference between success and failure… … I try to be conservative in my risk management. I want to make sure I’ll be around to play tomorrow. Risk control is essential.” - Monroe Trout
“If you personalize losses, you can’t trade.” - Bruce Kovner
“The best traders have no ego. You have to swallow your pride and get out of the losses.” - Tom Baldwin
“Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical.”- Larry Hite.
These persons are the best in the industry and the only thing they agree on is risk control. Now do your part.
