The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

PART ONE QUESTIONS

PSYCHOLOGY, RISK MANAGEMENT, & RECORD-KEEPING

Beginners buy whenever some vague tip floats their way. Experienced traders know that serious buying requires serious research.

Serious buying also requires good money management. There are simple mathematical rules that tell you how much risk you may accept on any given trade as well as on all your open trades combined. Those who violate these rules have a short life expectancy in the markets.

In addition, there are certain psychological techniques that can help make your life in the markets less stressful and more satisfying. Plus, there are highly desirable ways of record-keeping that will help you grow into a mature and successful trader.

That is why, before we get into selling and shorting, you need to answer these questions about psychology and money management, buying decisions, and record-keeping.

Please do not rush as you work through this chapter. Give these questions a great deal of thought and record your answers on pages 30 and 31. Be sure to re-read the appropriate sections in The New Sell and Sell Short if you miss any answers.

Please go through all questions in this section and record your answers prior to turning to the Answers section.

Answer Sheet