Risk Tolerance

At ETF Trader Advisor we have come to understand that trading is not about being right or wrong; it is about being in the game with a trading methodology that has been tested to produce a high probability of win ratio. When your ratio of win to loss is high for entering a trade, all you must do is keep trading. This means it is not about one or two trades being correct – it is about a series of trades. The percentage of professional traders who are successful is very low. Only those who consistently keep trading without being attached to the outcome will win.

In trading, the process of deciding how much risk to take on at any one time is personal. The major question to ask oneself is “how much volatility in the market can I tolerate before cashing out?”. There is nothing magical in the stock market and there is no reward unless you commit to some level of risk. We at ETF Trade Advisor enter any new trade with a maximum risk tolerance of 2%. If the trade is going our way, then we protect the profit with our ongoing progressive stop prices. In contrast, if the trade is not going our way our stop position automatically closes our position. Then we wait for the next one.