Risk management is essential in trading from "summary" of Charting and Technical Analysis by Fred McAllen
Trading in financial markets involves risks that can result in significant financial losses if not managed properly. Risk management is a crucial aspect of trading that cannot be overlooked. Traders must have a clear understanding of the risks involved in their trading activities and implement strategies to mitigate these risks. One of the key principles of risk management in trading is the concept of diversification. Diversification involves spreading out investments across different asset classes to reduce the impact of potential losses. By diversifying their portfolio, traders can minimize the risk of losing all their capital in the event of a downturn in a particular market or asset. Another important aspect of risk management in trading is the use of stop-loss orders. Stop-loss orders are designed to limit the amount of loss that a trader can incur on a particular tr...
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