Attitude to Risk - Why is it important?

Your trading system should be compatible with your own personal attitude to risk.

Therefore your risk tolerance or attitude to risk is of prime importance.

There is a chain of connected statements about system trading:-

• Your trading goals depend on your attitude to risk.
• You will trust your system if you know it is working towards your personal goals.
• You will be comfortable with your system if you trust it.
• You will not interfere with your system if you are comfortable with it.
• If you don’t interfere, you will be following your system.
• If you follow your system you will have the best chances of success.

These linked statements are much more than a talking point, they explain the major difference between the small number of successful commodity traders and all the others.

Until he is clear about his attitude to risk, a trader will not be able to identify his trading goals, which are the foundation on which his systems must be built.

 

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