AVZ chart, page-3988

Not having a stop loss is like placing a bet and sticking with it regardless of the outcome.

Using 100% of trading capital to buy one stock is like betting your house at Vegas.

Statistically, both of these trading approaches lead to huge capital destruction. Your life in the market will be short. Broker account statistics act as empirical evidence for the large number of traders who wash out in the market.

CFDs will wash a trader out of the market even quicker. Picture a trader going long with a 1000% leveraged CFD at $0.34. You are effectively trading $500,000 with only $50,000 initial capital outlay on the long CFD trade. You enter the CFD trade after considerable research, both technical, and company fundamentals. The longer-term and shorter-term trend is up. The stock recently made a new 52-week high. You also have euphoric support from fellow HC forum members. There is also the ostensibly perspicacious analysis from the so-called mining experts. You now have all your figurative ducks lined up in a row.

Price subsequently declines. Your initial $50,000 is gone within less than a week. You continue to hold and receive a margin call from your broker. You deposit additional funds to top up your account. Price continues to decline, but you hold on because you like the company story. Besides almost everyone else is bullish on the stock's long-term fundamentals. The disposition effect blinds you to the harsh consequences of not having a trading plan that includes money management. Finally you capitulate and sell at $0.15 with a catastrophic $280,000 loss.

The share market has one aim, and that aim is take as much of your capital as practicable. Ignore money management and you will perish in the market.