How much risk

Trading is risky. There are times when you have almost no evidence to put on a trade but your gut instinct. For some traders, a gut instinct is enough validation to put on a trade. Others, however, need much more evidence and reassurance. It’s useful to know how much reassurance you need before you feel comfortable taking a risk. You’ll trade more calmly if you match your risk tolerance to your trading style.

Traders differ in terms of risk tolerance. Some traders enjoy taking risks and are willing to put on a trade with almost no validation. Other traders, however, seek out as many sources of validation as possible.

There are many ways to trade profitably. What all winning traders have in common, however, is that they match their trading style to their levels of risk tolerance. The closer the match, the more calmly you’ll trade and the higher your chance of maintaining profitability.

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