This trade has a risk of about $60 for a 100-share position
High Yields with a Strategy for a Beat-Up Retail Trade...READ MORE
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High Yields with a Strategy for a Beat-Up Retail Trade
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There's a reason so few investors are ever able to beat the market: they've been lied to. They have no idea what really drives stock prices. When you discover exactly why stocks rise or fall, it's easy to avoid losers and find more, bigger winners. Check out this "open secret" to wealth.
Assuming a trader could buy 100 shares of a $40 stock, they would need to commit $4,000 to the position. This might strain the resources of a small investor. They could then set a stop loss order at $37 and hope their risk is limited to $300.
However, that strategy may not always work. A stop loss order does not guarantee an execution of the order at that price. If there is bad news, for example, the stock could move down sharply, and a large gap down is possible at the open. That order could be executed at $34, or even lower, and the loss would be larger than expected.
There are some strategies that can limit risk to a precise dollar amount as we explain in our latest article, which includes details on one of those strategies. The article also includes an example that uses recent market data to explain the concept and show the exact risks and potential returns.
The details are in our latest free educational article that is available right here.
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