One of the things that traders must do when trading is to be aware of and limit risks. Trading is also a business. To maximize profits, traders should focus on the advantage and understand why they are involved in trading, what is the risk in it?

In the book "Attack Currency Trends", author Greg Michalowski mentioned three steps to effectively manage risk: Identify and identify risks, limit risks and accept risks.

Greg Michalowski not only applies this in trading, but he also applies it to life as well.

At Christmas, his family received an invitation to a small party from another family. According to his habit of risk assessment, he sees that this is the time when Covid's epidemic is raging, so the risk of infection is also high. But after careful consideration, he still agreed to the offer (this is step 1, identifying the risks).

After determining the risks, his family and his friend's family use all possible measures to limit contact, talk to avoid infection (this is step 2, limit the risk).

But during the party, everyone got excited and played too much and on December 26, he received word that his neighbor was positive for Covid-19. Then there was him. Fortunately, his wife and son are okay. And this is when he needs to accept the consequences (this is step 3, take the risks).

After he became infected, although the treatment was very hard, he soon improved. It can be said that his decision this time is really too risky, but he is also quite fortunate to be gradually recovering.

So it can be said that trading is one thing, obeying the principle, limiting risk is another.

What about trading?

Sometimes we execute a trade without even considering placing a stop loss and surviving over and over again. It is this that makes the trading that we already do, which are inherently traded, can even get even worse.

So, in every trading you make, absolutely never neglect risk management. No matter how good your strategy or judgment is, do the following 3 things before trading: identify risks, limit risks and accept risks.

That means that during the trading process you will always be at risk, as long as you are aware and identify it, find a way to minimize that risk as small as possible. Of course, it is not excluded that you run into risks, then you just need to simply accept it.

Many traders know and limit the risk, but in the end, do not accept it, the next consequence causes a series of trading orders to lose. This is not worth it at all.

The message that Mr. Greg Michalowski sends to us is that whether in life or trading is the same, it is important to identify, limit and accept risks. However, in order to do these things you need to follow the principles set by you. Failure to do so could have serious consequences. Don't start trading hoping that all is well off.