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27/05/2011 17:54:55
(487 weeks ago)
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Dynamic Stock Market Strategies Manages Risk
Dynamic Stock Market Strategies is all about the management of risk.

The big secret of winning on Wall Street is: There is no secret! No Holy Grail. Sorry.

Rule #1: Capital must be managed.

No one cares more about your money than you.

If you do not manage it yourself, then someone else must manage it for you.

Risk cannot be eliminated but it can be managed. Without risk there can be no reward.

Ancient Chinese proverb: Risk and Reward are two sides of the same coin.

While the above statement is true enough, where is it written that in order to make a killing in the market it is necessary to run the risk of getting killed?

Dynamic Stock Market Strategies utilizes financial tools, called derivatives, to help solve that dilemma.

The only sensible way to trade a market is to use a Put to protect a long position and a Call to protect a short position.

Options are simply financial tools-of-the-trade that professionals use to help maximize profit and/or limit exposure to risk. Learn to use them.

By combining the underlying with derivatives in various degrees, a portfolio can be constructed with total risk characteristics equivalent to any desired level of exposure.

It is possible to design a completely risk-averse portfolio but with a positive profit potential.

Dynamically managing capital is much more than a task. It's an adventure.

Rule #2: Don't be confused by the semantics of Wall Street: UP is not necessarily GOOD; DOWN is not necessarily BAD. UP is simply UP; DOWN is DOWN.

The only thing that matters is to be in sync with the market.


Rule #3: If you don't know what's going on inside the "Dow", you don't know anything worth knowing.

The construction of the Dow-Jones Industrial Average seems to be designed to deceive rather than enlighten. Think of it as a "smoke screen" to confuse investors.

An *censored*ysis of the activity of the Dows' components, first individually and then collectively, can yield valuable clues as to the markets' intentions.

Let the journey begin...

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