Scalp Trading High Priced Stocks A Crash Course In Risk Management

Scalp trading is something that only seasoned professionals should venture into

. This is not a territory for newcomers in the stock business, let me tell you. So all of you adventurous young guns over there; dont even think about scalp trading, unless you want to burn a big hole in your pocket. In fact, seasoned professionals too, have to deal with huge losses sometimes, especially when they have to deal with high priced stocks.

Risk Management

So whats the reason why most people fail to make their fortune by day trading and scalp trading? Its really simple. Have you ever heard of the saying Look before you leap? Its all a question of that! People dont practice risk management and this is the sole reason why they fail to hit pay dirt.

So how will you control risk? Or rather, how will you save yourself from getting burnt badly? First off, you need to know your personal risk tolerance level. You need to know the exact value of the maximum exposure that you can possibly take. No plus minus, just the black and white figure. There is no room for uncertainty.

Also, you need to calculate the risk of every trade before you go in for it. Consider the worst case scenario and determine the maximum sum of money that you could lose in this process. Only and only if you have enough financial security to deal with the loss, should you consider the trade, otherwise, its time for look for other opportunities.

Taking risks and having them pay off always gives us a high no doubt, but that one time when you make a gamble which you cant recover from might just kill you!

Day trade

If youre a day trader, then you obviously do a lot of trades, so you need to be extra cautious. Thus you must always be aware of a protective stop and know exactly when a loser is liquidated.

The main point here is that you should never trade without a protective stop, so when you assume any sort of position, do ensure to place a stop loss. This will help you immensely. It might not give you as big a high as taking huge risks, but in this business, taking risks is akin to suicide!

If you are wondering where you can trade, a live trading room is your best option. Everything happens fast and there isnt any uncertainty involved. But before you go for the real deal, it might be a good idea to check out the living trading room trials.

This helps the learning experience. Personally, I feel that scalp trading is probably the most difficult form of trade to master, so do take adequate precautions before taking the leap!

by: Leroy Rushing

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