Smart Money Principle™

The Smart Money Principle is a risk reduction, or risk management tool. The goal is to earn at least 10% when your stock succeeds, but that you strictly limit your stock stop loss to only 2%-3% when your stock fails. If you follow this risk management rule, you will always be moving forward.

What is the single-most valuable commodity in the stock market?

The answer is, the ability to predict future direction. If you could do that you would be immensely rich.

Now, nobody can predict with 100% accuracy the future direction of a stock; thus the need for a risk management system. That does not mean that the market doesn't leave clues for those who know how to read them.

Trading stocks and employing risk management are a lot like the weather. Tomorrow's weather can never be forecast with perfect clarity, but an experienced meteorologist can read the available clues, build models, and predict with a reasonable level of accuracy whether it will rain, snow, or be sunny the next day.

What happens though when the weatherperson tries to forecast the weather into the following week? Data becomes less reliable and the computer model's effectiveness begins to break down. The best a meteorologist can do is make an educated guess that is subject to change.

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*The Smart Money Principle™is a trademark of Securities Research Services

* Not every stock leaves reliable clues. Even those that do, do not do so all of the time. We provide only those stocks whose future movement can reasonably be projected at that time, considering only those where good risk management can be employed.