Risk Management
Risk Management: The Part of Investing That Comes First
Risk management starts before any trade or investment is placed and helps make uncertainty survivable.
Decide the size before the story
A position that is too large can create stress and poor decisions even when the original idea is reasonable.
Define what would make the idea wrong
Write down the evidence that would change your view. This keeps a decision from becoming a belief that cannot be questioned.
Protect the ability to continue
The purpose of risk management is not to remove uncertainty. It is to ensure one decision does not stop you from learning and investing again.