(SECOND PART OF A 5 PART SERIES)
NOTE: FOR LACK OF SPACE, THE AUTHOR IS PUBLISHING THIS ARTICLE IN A 5-PART SERIES.
- 1. Thou must first know thy self and thy market well.
- 2.Thou must deal only with registered brokers.
- 3. Thou shall shall not invest money you can not afford to lose!
One
of the major pre-placement considerations an investor must make is
determining the amount of capital he will be using. There is not set
rule for this. In fact, everything is left to the discretion of the
investor. However, one must understand that every investment involves a
certain amount of risk. Placing an investment (online or otherwise) is
in reality a form of risk-taking with the hope that the placement will
generate a certain amount of profit after a while. However, the
presence of the entailing risks also tells us that there is a
possibility of losses. In fact, in fast moving markets the likelihood
of losing all of your investment is all too real. This is the very
reason why you must not invest more than your 'risk capital'. Risk
capital is that part of your liquid assets or your wealth which if lost
will not affect your lifestyle or your family's way of life. Never ever
invest money meant for your your family's daily subsistence. Doing so
will make an emotional wreck out of you. You will turn out to be an
emotional trader; setting aside fundamentals; trading out of fear of
losing the money on which you and your family depends on; holding on
too long to losing positions hoping the market will finally turn into
his favor. Once you become emotional trader you start trading on false
hopes which ultimately lead you to disaster and the total loss of your
investment.
- 4. Thou shall not use unprotected computers!
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