| When it comes to trading, two adjectives are | | | | my account, therefore I'm willing to accept a loss |
| used more frequently than others to describe | | | | of two percent or less on this next trade.” |
| traders' various styles: Aggressive and | | | | Other conservative traders may set a stop loss |
| conservative. We're here to tell you that in a | | | | order for 10 cents (or another arbitrary amount) |
| perfect world, you'll find a way to marry both of | | | | and if their stop gets taken out, they're fine with |
| these styles to boost your chances of success. | | | | that because they didn't lose a lot of money. |
| After all, the most seasoned trading veterans will | | | | What we're saying here is being conservative |
| tell you the best aggressive traders know when | | | | pays dividends in the long run. You're going to |
| to be conservative and the best conservative | | | | have losers. It's just a fact of life, but by keeping |
| traders know when to increase their risk and get | | | | your losses small, you keep more ammunition |
| aggressive. There's nothing wrong with either | | | | around to get aggressive later. |
| style, so let's highlight some of the things you | | | | When Do You Get Aggressive? |
| need to know about risk as it pertains to trading. | | | | This isn't an easy question to answer, especially |
| No Need To Always Hit A Home Run | | | | for traders that are conservative by nature, but |
| One of the biggest mistakes new traders make is | | | | a starting point may be after you've been trading |
| always attempting to make the next trade the | | | | for a few months and you've noticed your |
| trade of a lifetime. They risk a fair amount of | | | | conservative model has helped you pad your |
| their account balance on a single trade hoping this | | | | account. You now have some confidence and |
| will be the trade that delivers a new Ferrari or | | | | some cushioning to absorb a large loss and you |
| vacation home in Hawaii. This is absolutely the | | | | want to try to milk a trade for more money than |
| wrong way to approach trading. Over the course | | | | you have previously. |
| of your trading, you are going to encounter | | | | So what do you look for? Make sure the |
| trades that, in baseball terms, are just singles. | | | | indicators you use are confirming the emergence |
| They're winners, but there was no signal to back | | | | of a strong trend. If you're going to increase your |
| up the bus and risk more than usual on that | | | | risk, you want to be on the right side of the |
| particular trade. | | | | trend. For example, let's say you're trading stocks |
| There's nothing wrong with trades like that and if | | | | and the market has been up all day. There's about |
| the maximum number of shares you can trade | | | | two hours left in the trading day and you've been |
| per position is 1,000, having some winners with | | | | watching ABC Inc. inch its way up all day. The |
| 500 or 600 shares is fine. Remember that even | | | | sellers have been weak and then you see a fresh |
| the best home run hitters also strike out a lot and | | | | wave of buying come along with increased |
| just as a strikeout definitely isn't good in baseball, | | | | volume. This is an ideal setup for you to put on |
| it can be detrimental in trading as well. In other | | | | aggressive long trade. The stock is strong, the |
| words, hitting some singles and doubles is what's | | | | market's strong and the odds are on your side. |
| going to keep you in the game and position your | | | | This would be a “smart-aggressive” play. |
| account to allow you to eventually swing for the | | | | Lean Toward Conservative, At Least To Start |
| fences. | | | | Getting aggressive is about gaining experience and |
| Know Your Risk Before You Trade | | | | comfort in your chosen asset class. No, you don't |
| The key to being a solid, conservative trader, not | | | | want to be so conservative that you're cutting |
| an overly reckless, aggressive trader, is knowing | | | | good trades short, but you don't want to be so |
| your risk BEFORE you put the trade on. | | | | aggressive that every trade has you walking on |
| Aggressive traders that lack discipline will throw | | | | eggshells either. That's the great thing about |
| the same share size or dollar amount at every | | | | experience. The more you have, the better you'll |
| trade with no thought to the consequences. The | | | | understand when to swing for the fences and |
| conservative trader says “I've got $10,000 in | | | | when to just try to get on base. |