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Your choice: A 5.6% Loss or an 81.2% Wait?

The Vital Importance of Using Stops 15 Dec 2011 3:45 PM

No trader can expect all of their trades will be consistently profitable, so losses will inevitably occur at some stage. The key is to have more profits than losses and for the size of losses to be kept low, compared with the size of profitable trades. 

That’s why, before buying a stock, it is important to know where you will exit the trade if it does not perform the way you expect. 

To do this, Jim Berg places an Initial Stop to protect his trading capital. Importantly, the Price level is determined and set before buying the share. 

In today’s article, we look at an extract of one of the 5 stocks detailed each week in the Newsletter as complete educational tutorials and compare the results of two typical scenarios .......

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Jim Berg and John Atkinson are Authorised Representatives (AR Nos. 322724 and 1251439) and ShareTradingEducation™.com Pty Ltd (“STE”) is a Corporate Authorised Representative (CAR No. 322726) of Maven Capital Pty Ltd, Australian Financial Services Licence AFSL 418504. Examples from the Australian and USA markets are provided to demonstrate that Jim Berg’s principles may be used globally. This educational material is from an Australian source and complies with Australian law and not necessarily any other (local) law. Direct investing in the stock market can result in financial loss. STE products have been prepared for the general information of investors and do not take into account the investment objectives, financial situation and particular needs of any particular person. Persons intending to act on information in STE's products should seek professional advice to confirm that the investments or strategies mentioned are appropriate in the light of their particular investment needs, objectives and financial circumstances prior to taking any action. Refer also to the full Customer Caution Notice in our Terms and Conditions.