Risk Management

Managing your risk is very important. Through true diversification, you can reduce your risk substantially. Every time you invest or trade a stock, you are putting your money at risk. The amount of risk that you are willing to put your money in is up to you.
I try to diversify as much as possible. To reduce risk, I also put in stop loss orders. With stop orders, if the stock trades at or below the stop price, a sell order is automatically put in and the stock will be sold at the bid. I do this because I know how much per stock I am willing to risk and this way I limit my losses. When I buy a stock, I look to see how much I can possibly lose, and how much I could possibly gain. If the likelihood of the stock going up or down is 50/50, I almost never buy the stock. If you want to take that gamble, go to a casino. If you want to make money, buy stocks that have a greater likelihood of going up rather than down. By buying breakouts or stocks that are in an upward trend, you are buying stocks that have a greater likelihood of going up.
Put the same amount of money in every stock. Always put in stop orders. Know the chances of having a winning trade.