Our friends over at Wikipedia define risk as “the potential of losing something of value.”
One the surface, that sounds right. However, when you peel back the layers as it relates to investing or trading in the markets, that definition is of no value whatsoever.
Let me explain:
When considering allocating your capital into a trade or investment, I would rather have you think of risk like this: Risk is what you don’t know.
You see, when we enter a trade, it’s based strictly on the probabilities that we’ve already put the odds in our favor using the analysis I provide by knowing things like:
- The chart setup or pattern identified works out at least 75% of the time – over and over again. It matters not whether it’s a stock, bond, currency, commodity, etc… A chart is a chart and as you’ll learn over time by watching the videos, the same chart patterns repeat over and over and over. There are no secrets, just things we don’t know or haven’t been exposed to yet.
- The mathematical calculations are telling us a certain price level is likely to happen. Again, through the videos, you’ll learn that price levels on charts can and tend to act as magnets as we get closer and closer… Again, no secrets, just things we don’t know
- And there’s much more – just watch the videos…
You’ll also learn that one of the most important aspects of entering a trade is knowing where you’re wrong. This enables you to identify a certain price level that if breached let’s us realize some other chart pattern is developing from what should have been the norm.
Knowing this in advance allows us to minimize our monetary risk if necessary, and remain confident the trade will work out in our favor. If it does not, we learn from it and use that information in the future to our advantage.
Entering a trade because “we think the stock should move higher” is not a strategy. Entering a trade because we’ve identified high probability chart patterns that repeats itself a high percentage of the time is a strategy and reduces the risk of losing capital and increases the probability of making more.