Monday 20 October 2008

Preserving Your Capital

capital preservation
A Good Stock Market Trader not only knows when to trade but he or she also knows when to stay on the sidelines. Undertaking the latter route is far more important than actually a lot of traders give it credence.

With the huge and unprecedented ups and downs that the Stock Markets across the world have been going through lately, the notion of Capital Preservation must be heeded more than any time before.

Full-time stock market traders are particularly at risk in such market conditions for the simple reason that a lot of them solely rely on trading to make a living for themselves and their families. So it is highly advisable to make sure that they tighten their discipline and stick to their money-management systems more religiously than ever before.

The amateur stock market traders who trade on leverage are particularly advised to be extremely cautious before they commit themselves to opening any trading positions. They at least must make sure they have devised a working strategy for this type of market environment before entering the trading arena and they ought to stop chasing their losses once they realise their trading plan has stopped being effective.

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