This blog post is in response to a comment by a reader, Temperament: click here.
Hi Temperament,
With my limited knowledge of trading, I know that true blue traders must be emotionless. They cannot fall in love with anything. They should not hate anything either. They do what the charts tell them to do, when to long, when to short, when to take profit and when to cut loss. So, I don't think they truly hedge. Hedging to traders could mean having a looser cut loss so as not to be whipsawed, perhaps.
As for risk management, I am a poor example. By conventional wisdom, we should not have more than 10% (some would say 5%) of our money in any one counter. For me, I allow up to 40% of my money in a single counter sometimes.
For sure, we can and should reduce risks in investments but it is impossible to eliminate ......
