Basic of Risking

To win some, we risk some, that is the concept of risking.

It seems simple, but too many people engage in it without any structure, it is as good as hopping on a journey not knowing where you are to begin with, not knowing what mode of transport to take, not learning the traffic rules, having zero ideas of what danger you might encounter, while also not knowing where the destination is.

Where do you think you will end up?

To begin with, you should identify your capital. This is where you begin, this is the start of the journey. Without clarity in this, you cannot trace your progress.

Next you should choose your vehicle. Be it stocks, property, options, forex or any mode of investment you choose, it is important to know the rules, learn the tools, understand the policies learn the underlying risks of the particular field you are in.

Next, study the field to find your edge. For example stocks, you might want to find the range of stocks with optimistic outlook, perhaps green energy. Zoom into the sector to find the quality few, and perhaps use technical analysis to find the entry point. Your edge essentially gives you positive expectation combining win probability and reward ratio.

Next, manage your risk. You should know how much to risk, you should know when to accept a loss and cut it, or better yet set up your stop-loss level as you open a position. You should also plan for the worst and think about how badly your capital may be hit if you have a long streak of bad luck.

Next, set a reasonable expectation. Many investors imagine making millions within a couple of years, I would say it is not entirely impossible, it all depends on your capital, edge, and risk. But typically, it takes a few years before one learn the essential lessons to begin making a stable return.

Capital too small will take too long to compound.
Without edge, you are simply expected to lose money.
Without proper risk management, you will turn your edge into disadvantage.
Without psychological stability, the other factors are unreliable.

All qualities above are Indispensable.

I wish you a smoother investing journey ahead.