Trading can be an expensive endeavor

There's money to be made on the security markets, but don't be fooled into thinking that earning profits is easy or effortless. Many smart people have taken on trading as a hobby or profession and been quickly humbled mai by poor trades and losses. Do your homework and practice wise money management, or you could end up joining their ranks!

By doing homework, I mean look at charts and develop a trading plan. The more you prepare, much like for a test, the better your trading results should be. I've seen a direct correlation between the level of trading success I've achieved and how much time I've put into preparing for trading situations. As far as wise money management, the key here is making sure to take a loss when it becomes apparent a trade isn't going to work. Take the loss and move on. Take this loss early and quickly before it becomes a much bigger loss.

The most important rule for managing your trading and investing funds is to not risk money that you can't afford to lose. There are many obvious and unforeseen risks in the financial markets. If your lifestyle changed dramatically because a trade or investment wiped out your account, then you're probably putting too much of your personal net worth on the line.

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