Put about by people who know no differently, it is a common assumption that it is very risky to undertake stock market trading. Harsh as it sounds, this is usually through misinformation, hearsay or lack of understanding.

Nowadays, with the advent of online trading and betting facilities, technology has brought such activities as stock market trading directly into our homes, whether as a business, hobby or pastime and is within easy reach to those of us with internet access and or a telephone.

Let me take an example or two in order to demonstrate my point in terms of betting. I would liken most betting on sport to be something I would consider risky, in that it is not possible to properly manage a bet or stake and end up losing all your money.

For instance, with horse racing there are more than two horses, so that presumably increases the odds before we even consider unaccountable injury or a falling horse. With football, only two teams, but injury cannot be accounted for. It used to be possible to bet by the method of arbitrage, but this is getting more and more awkward owing to the extreme attention it requires and I believe bookies are getting wiser all the time to it. So since these are not easily manageable situations, they become risky.

Risk on the other hand, means something rather different. Risk can be managed and risk management is the one of the prime considerations for stock market trading. The odds are only ever fifty fifty in trading, since in terms of movement, price only goes up or down.

But more than that, being able to use a facility called a Stop Loss is a big part of what trading management is all about. Nothing is ever one hundred percent guaranteed but activating a stop loss procedure in your trading strategy is as close as it gets.

What you are doing is in a way like insuring against a price movement that might go against you, in that before it has gone too far, your trade will be automatically terminated. You will have allowed a margin for some movement against you, but you can place your stop loss tolerance at a price representing the amount of money you are prepared to forfeit anyway. This strategy highlights the well known and much emphasised fact that all traders lose some money along the way. The skill is to have your gains outweigh your losses.

The underlying philosophy of stock market trading then, is partaking in a really fulfilling activity that can be classified as a managed risk, rather than something that is rather out of our control and risky.

Would you like to discover more about the techniques successful traders use to make profitable trades?

Download them free here: Trading Lessons

Ian Jackson is well read in online trading, learning how to trade the hard way - and now he reveals how you can learn the business too, without all the growing pains.

Source: www.articlesbase.com