The market goes strongly against me. I see potential major loss.
The risk manager cometh -- he tells me to cut the position in half.
Now, here is what happens when the risk manager comes == I lose money, and three out of four times the market goes back into my favor. I usually get out at the worst price.
But the risk manager also helps me avoid catastrophic losses once out of four times.
So, small guaranteed losses vs avoiding a serious loss.
Yes, it is frustrating to see the market come back, yes, it is frustrating to get out at the worst price -- "if only I had hung on a little longer".
But I feel that sigh of relief when I avoided tanking my account. I am still in the game.
Remember that whenever you hit your stop/loss and want to wait just a little longer.
The risk manager cometh -- he tells me to cut the position in half.
Now, here is what happens when the risk manager comes == I lose money, and three out of four times the market goes back into my favor. I usually get out at the worst price.
But the risk manager also helps me avoid catastrophic losses once out of four times.
So, small guaranteed losses vs avoiding a serious loss.
Yes, it is frustrating to see the market come back, yes, it is frustrating to get out at the worst price -- "if only I had hung on a little longer".
But I feel that sigh of relief when I avoided tanking my account. I am still in the game.
Remember that whenever you hit your stop/loss and want to wait just a little longer.
