Trading is risky, that’s the attraction because if we manage the risk properly we’ll make great profits. But are we properly in control of the risks we’re taking? Do we really understand the risks?
For example, shares are typically the highest risk due to single event risk. The problem is that a trading update that surprises the market one way or another can move a share by easy 5% or more. That’s great if we’re on the right side of the trade, but really bad if we’re on the wrong side.
This video link below helps understand the different asset classes and their risks, the five potential trades, where to place a stop loss, the 2% risk management rule, portfolio leverage risk and the 6% rule for overall portfolio risk.