RISK MANAGEMENT FOR TRADING

1. There are 2 risk: 1) low risk, and 2) high risk
- High risk is more money. Either more money you earn, or more money you lose
- Low risk is less money. Either less money you earn, or less money you lose

2. Sizing
- Use more money for low risk, and
- Use less money for high risk

3. Positioning
- Buy on support is low risk
- Buy on resistance is high risk
- Buy low sell high is low risk
- Buy high sell higher high is high risk

4. Diversification
- The more trading risk you take, the more diversification you need

5. Probability
- Certainty in trading is uncertainty, only probability
- The higher the probability is low risk, and the lower the probability is high risk
- The more precise the moment, the higher the probability
- Trading to get right price is being patient and waiting for the moment is right

6. Volatility
- Trading in high volatility stock is high risk, and low volatility stock is low risk

7. Timeframe
- Trading in long timeframe is high risk, and short timeframe is low risk

8. IHSG
- Green IHSG is low risk, and red IHSG is high risk

So adjust your trading style, according to your risk profile.

