Questions Regarding Risk-Taking

Mar 17, 2007: 10:48 AM CST

You can increase your risk-taking ability and overcome fears by analyzing your actions and asking empowering questions, as explored earlier.

Here are a few questions which can further help with your analysis and motivate you to make a difference once you understand more about what keeps you from taking risk.  These questions are designed to take place when analyzing your trading decisions and chosen entry and exit points.

  • Exactly how much were you influenced by your emotional reactions?  Did it make a major difference in your decision?
  • Did you stay with the trade with confidence, or did you exit prematurely once you had a profit because of anxiety?
  • Did you add to your position (increasing risk and potential reward) and hold it through an extended uptrend you anticipated?  Did you add at all when you should have?
  • If the stock declined below your purchase point (but not stop-loss point), did you stick to your analysis and hold the trade (take heat) or did you cut your loss quickly?
  • Were you trying to call a top or bottom or were you fully open to price action?

If you are not getting the results you envision, you must devise some form of analysis to study your behavior, results, and your reaction to the market opportunities you are trading.  Documenting your trades and analyzing more than just “profit or loss” can give you great insights into ways to increase your risk-taking behavior and profitability.

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3 Comments

3 Responses to “Questions Regarding Risk-Taking”

  1. bp Says:

    I owe you a big thanks, read my post today…. THANKS

  2. Corey Says:

    Hey BP

    Great insight! Thank you for the reference and I’m so glad something I said helped.

    One thing I found useful is to trade for “levels.” What this means is to pick a point where you think the market will go, then pick a point where the market will not go (and if it does, your idea was wrong) and just walk away (the hardest part, believe me). The market will hit one of these two points, but it will often oscillate between them until a clear direction is achieved.

    This helps eliminate the “itchy finger” syndrome where it’s more comfortable to get out of a trade than in one (something I still work on).

  3. Ideas to Reduce Trading Anxiety StockTwits U Says:

    [...] question lists that may help, feel free to suggest others beyond the following:  Dr. Brett,  Corey Rosenbloom,  Ray Barros, Dr. Van [...]