25 Tips for Managing Risk Better

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This is a very tough market that takes considerable skills to master. In Monday's column, I discussed the reasons why controlling risk in this environment works a lot better than chasing profits.

Today let's expand on these concepts so you can put theory into action. Here are 25 ways to improve your risk management skills:

Visualize the best and worst outcomes for each trade. Then have an exit door ready at all times in case things go haywire.

Time affects the reward-risk ratio as efficiently as price does. Reduce position size when time signals don't line up well. Watch the clock and become a survivor.

Good timing on bad stocks will make more money over time than bad timing on good stocks.

The best signals converge through many types of analysis. Pull up moving averages, Fibonacci retracements and Stochastics. Then see where they intersect.

The best trades come when the crowd leans the wrong way. You can't see this happen if you're stuck in the middle of the crowd trying to get out.

Here's the real Holy Grail: Don't trade when you can't measure your risk, and stand aside when you can't find your edge.

Let your winners run, but only when the markets are running. Don't overplay your hand in a choppy market.

Keeps your costs down. A fascination with expensive software and fancy workstations will undermine your trading performance, not improve it.

Learn how to take "good" losses and enjoy it. Realize you can rebuild your capital no matter how far into the hole you fall.