Smart Money Principle™ Cont...

Have you ever bought a stock that moved up for a nice profit only to watch that profit whither away because you didn't know where to sell it?

Human nature conditions us to think that if we hold it longer it will go higher. Our solution is to this problem is to use a risk management tool that forces us to ignore this instinct and that will ensure that we can never move back. This risk management tool is called the Smart Money Principle™

Read on to learn more

You know that "click-clack-click" sound you hear when traditional roller coasters climb the first hill? It is caused by "dogs" under the cars that ratchet into place and prevent the trains from falling back down the hill in the event of a lift chain failure.

Step 1: Never Let Your Stock Trading Account Slip Backwards

The Smart Money Principle™ is a risk management tool, like a ratchet, that forces you to keep moving forward and doesn't let you slip backward.

Everyone who has found success in trading stocks uses some form of this risk management rule.

The risk management rule is simple. Take small, quick profits from the most predictable part of the move and never risk more than 2%-3% on any one stock trade.

Trading s tocks 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.

Step 2: Take 10% Profits

When we provide members with a stock, we look for the most predictable move we can find and we place a sell target to quickly capture that gain. This is usually around 10%.

Step 3: Take very small risks

When we recommend a stock trade we have a very important goal in mind. We want to find an entry point at chart support so that if something goes wrong our subscribers will know right away and get out. We suggest never taking more than a 2%-3% risk on any one stock. This means that we never recommend an entry more than 2%-3% away from true chart support.

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