It is a good discussion thread on risk management, which should form a part of the TRADING strategy. But I think everything in trading/investment comes to the INDIVIDUAL personality. I don't trade indices/forex and will never take a position in these two esp with a CFD provider, because this kind of trading doesn't suit me. The reason being, when I was trading them, I'll watch slow stochs, 13,21,41 ema's and MACD to make an entry, the moment I take a position, within couple of minutes, the trade will go exactly the opposite direction to my position and I'll take further position after it goes up/down 1/3rd or 1/2 of daily range to average down but then my position will never become a profitable position. After sitting thro some painful couple of hours, I'll close (mostly my providers will close the position and take the money away) at a significant loss. Only in the morning to find out that if, I could have managed to hang on for another couple of hours, I could have made a motza of my position. I used to think that may be I should go to a trading desk and tell them I have developed an indicater called 'T' and this indicator will work only on a team trading. i.e., I'll take a long position and ten other blokes can take a short at the same time, so that they'll all win, and only I lose, but overall we can have huge returns. But when the whole day is finished, I can find my own reasons for my failed trading may be the hourly stochs was turning, or its just the pivot points or some other indicator wasn't at the right spot. But I realised these systems are designed to take my money away (again I'm just blaming the system for my stupidity) but I wanted to emphasis that it is the personality you need to figure out what kind of a person you are to be successful in this business. I have developed a simple system now, that I wanted get back into shares in and around march next year. The system is put some money away each week for three months, after three months, buy an energy infra co that may pay a fully franked divs, and accumulate them over next 5-10 years. Buy a spec for a grand each year and keep it. Accumulate the shares once in three months and keep em (more importantly, don't check the prices everyday). Trading is too risky for my capital, but investing is not that much of a risk, provided you have done your home work on the company. Also currency is the same. Say for e.g. if you think USD will go up, then buy a physical currency, so that you can keep em. This will apply to all the commodities/trading instruments. Also I would like to point out that it is not only the risk management, but financial/money management is very important in my point of view. Lets say one has started off with some capital and achieved a target of say 100k. Then what are you going to do? Do you change your strategies? Do you expand to other instruments? Or what do you want to do once you reach some huge sums of money which you have not had before? I think answer to these questions will be helpful once you reach your first set of goals. So many indicators, so many systems, so many instruments to work on. I think it'll all come down to PERSONALITY, PERCEPTION and PLANNING (with some luck). I can still ramble on about other things, but I think it is time to stop here and may continue on next write up.
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