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How
to Minimize Your Risk
No investment advisor likes to admit it, but no stock picking
system is perfect. Sometimes, the stocks we think will explode,
don’t. Sometimes, the stocks we feature lose money.
There may not be a foolproof system to predicting the stock
market, but we do have a foolproof system for managing
risk. ChartAdvisor follows one of the safest
risk reduction systems available.
Using these three simple steps, you can reduce the risk in
your stock picking plan:
Three Ways to Take Risk Out of the
Stock Market
1. Screen Your Picks. This might seem obvious, but patterns that look like they
are developing into predictable trends do not always follow
through. After combing over thousands of stock charts a
day, ChartAdvisor will often not fetures a single
stock.
2. Get In. Get Out. ChartAdvisor preaches setting realistic target
exit prices for all stocks. We lock in high returns while
the stock is high, and we get out before the market has
a chance to change its mind.
3. Set Tight Stop Losses. This step is absolutely critical to minimizing your risk
in the stock market. If a sure-fire winner turns out to
be a fizzled-out dud, your system needs to have a built-in,
abandon-ship trigger. That is, you need to know when to
cut your losses and move on to brighter prospects.
ChartAdvisor sets its stop-loss trigger
around 3%. So if a trade starts to go sour, you
will almost never lose more than 3% of your investment.
“I am glad I took a second look at ChartAdvisor.
I keyed in your data from the 2nd of Feb 04 into a spread
sheet with 20% of capital allocated to each symbol and came
up with the 38% annualized return which is better than a poke-in-the-eye-with-a-sharp-stick,
considering "the market" has been a sideways affair
since the starting date.
What I must mention is how inspired and relaxed I am
after an in-depth study of your real trading account making
that amount of return... I can more fully appreciate the much-lectured
"cut your losses short now", seeing just how early
it pays to get out when the trade goes against you, rather
than the "give-it-room" systems I have tried."
-P. Cameron, New Zealand
Learn
the Final Key To the ChartAdvisor System:
Maximizing Your Profit in Up or Down Markets>
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