Low Risk Trading Strategies

<h1>Low Risk Trading Strategies</h1>Author: <a title="Rudy Lancaster" href="http://www.articlesbase.com/authors/rudy-lancaster/166854.htm">Rudy Lancaster</a> During this "recession" we're in, I'm sure I'm not alone in having seen supposedly "safe" or "recession proof" investments lose value. I don't know about you, but I would like to get nice returns even if the market goes down. Heck, I'd settle for my portfolio staying not losing value and just staying the same during an economic downturn. And that's what I'm going to talk about today. Some low risk investing strategies to do just that. Understanding Investment Losses Before we get to the actual strategies, let's cover what happens when you lose a significant portion of your portfolio. I've seen some aggressive trading systems out there that have you risking 5% or even 10% of your portfolio on a sigle trade. That's absolutely crazy! I'll explain why in a second. And if somebody tells you their system never has a losing trade, they're lying. Even the best will have a few losers in a row from time to time. So for the sake of this example, let's just say you have a $50,000 investment accounts that loses 40% of its value. What return do you need to make back on your next trades to earn that back? I'll give you a hint. The answer isn't 40%. Without turning this into a math lesson, the answer is actually 66.6% due to the fact that you're working with a smaller amount of money than you had before. Are you starting to see why just about every professional money manager never risks more than 2% on any single trade and it's typically in the range of .5% or 1%. That means even if the trader has 10 consecutive bad trades (it will happen at some point to everyone), you'll still only have lost about 20% of the account which can be made up with a few good trades. However, much beyond that 20%, and you're on dangerously thin ice. I know I said I've give you some safe and low risk investing tips so here is my favorite one. Exchange Traded Funds. They're a lot like mutual funds in that they're diversified, but they're a lot easier to profit from, you can make money even if the market goes down, the fees are lower, and they're liquid invesments. <a href="http://www.besttrendtrading.com/low-risk-trading-and-investing-tips/">Safe Trading Tips</a>About the Author: Learn more about <a href="http://www.besttrendtrading.com/etf-trading-benefits/">ETFs</a> and get a free report where you can learn how to get 6% returns each month in just 5-10 minutes a day after the markets close - no risky day trading!Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/investing-articles/low-risk-trading-strategies-1089053.html" title="Low Risk Trading Strategies">Low Risk Trading Strategies</a>

During this "recession" we're in, I'm sure I'm not alone in having seen supposedly "safe" or "recession proof" investments lose value.

I don't know about you, but I would like to get nice returns even if the market goes down. Heck, I'd settle for my portfolio staying not losing value and just staying the same during an economic downturn.

And that's what I'm going to talk about today. Some low risk investing strategies to do just that.

Understanding Investment Losses

Before we get to the actual strategies, let's cover what happens when you lose a significant portion of your portfolio.

I've seen some aggressive trading systems out there that have you risking 5% or even 10% of your portfolio on a sigle trade. That's absolutely crazy! I'll explain why in a second.

And if somebody tells you their system never has a losing trade, they're lying. Even the best will have a few losers in a row from time to time.

So for the sake of this example, let's just say you have a $50,000 investment accounts that loses 40% of its value.

What return do you need to make back on your next trades to earn that back? I'll give you a hint. The answer isn't 40%. Without turning this into a math lesson, the answer is actually 66.6% due to the fact that you're working with a smaller amount of money than you had before.

Are you starting to see why just about every professional money manager never risks more than 2% on any single trade and it's typically in the range of .5% or 1%.

That means even if the trader has 10 consecutive bad trades (it will happen at some point to everyone), you'll still only have lost about 20% of the account which can be made up with a few good trades. However, much beyond that 20%, and you're on dangerously thin ice.

I know I said I've give you some safe and low risk investing tips so here is my favorite one. Exchange Traded Funds. They're a lot like mutual funds in that they're diversified, but they're a lot easier to profit from, you can make money even if the market goes down, the fees are lower, and they're liquid invesments.

Safe Trading Tips

Learn more about ETFs and get a free report where you can learn how to get 6% returns each month in just 5-10 minutes a day after the markets close - no risky day trading!

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Article Tags: Safe Investments, Low Risk Investing, Etf Investing, Etf Trading, Low Risk Trading

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