I read an article that was saying one of the most important things to know about the stock market is when to go all in.
Well I kind of agree, you got to know that there is never a good time to go all in.
If you ever watch the world series of poker you will find that it is a very similar game to trading in the stock market.
Each professional player has something that gives them the edge in the game.
The only real reason many of the best players lose their chips is because of all in bets.
There are a lot of poker players that go all in with a 2/3 chance of winning.
Sometimes they win, sometimes they lose, but the odds where in their favor.
Now let's look at this from a trading standpoint.
If you bet 100% of your money on 1 trade then you might win a huge amount, or you might lose your entire account.
That isn't investing that is putting all of your money on red and hoping for the best.
Betting all your chips on one play may get poker fans, and it may make great stories, but ultimately that path leads to large losses, since you only have to be wrong once to lose everything.
So how can you avoid this? Well using things such as stop losses and money management can be a great help.
Limiting the amount you can lose every time you are in lets you still make those big returns, but not risking everything to do it.