It’s the American dream…
Buy one all-time great stock early on and get rich.
Amazon (AMZN) is a great example. Say you bought in around 50 cents/share in the late '90s…
Perfectly doable, right? Not that hard to achieve if you’re plugged into the markets every day, or following the guidance of someone who is.
Amazon then soars to $3,000/share. But here’s the departure from reality. Did your money appreciate 150,000%? It almost certainly didn’t even come close.
Because AMZN fell 95% three times on its way to $3,000/share.
Picture it. Assume you had invested $2,000 into Amazon in 1997. It grows to $100,000. You’re feeling great.
Then… it starts to dwindle. $100,000 becomes $75,000… $50,000… $25,0000… $5,000.
Is the average investor, left to his own devices and without proper guidance, really going to hold on to that stock? Doubtful.
He’s going to sell, and he’s going to regret missing out on those life-changing gains.
That’s why I stress the importance of position management in my trading advisory, RiskHedge Live.
Because trading doesn’t have to be all or nothing. You don’t have to sell all your shares and hunker down the moment volatility strikes.
Instead, you can shave your position when the risks are high… and add to your position at opportune times.
In other words, put yourself in a position where you can make a lot of money if things go right… and where you can’t lose much money if things go wrong.
That’s the way real professionals profit consistently in the market. And it’s the kind of guidance I provide in my live trading room.
In RiskHedge Live, I manage our trades on an ongoing basis—taking profits on spikes and buying on dips.
My job as a professional trader boils down to smart risk management and position sizing. It’s managing 99% of my “ordinary” trades so that the 1% can truly transform my readers’ bankrolls and flourish.
The truth is, you are going to have plenty of trades that don’t play out as expected. Manage them well, and you’ve done the hardest part.
Last year, RiskHedge Live posted a total return of 89% during our beta test period (June–December 2023).
Eighteen of my recommendations—or one-third of them—produced returns between -6% and +6%. These were duds. But that’s okay! We made a little bit of money on them overall.
A novice will look at this and conclude I wasted one-third of my time. Untrue. It’s by taking swings and managing risks that we find the huge winners.
Take Transocean LTD (RIG). It was my absolute worst trade last year. However, every recommendation I make comes with position-sizing guidance. In short, the riskier the trade, the smaller the position.
We only took our smallest position—which I call a "starter position”—in Transocean. So even that trade did little damage to our capital.
Uranium stock Cameco (CCJ) also comes to mind. We happily rode the uranium bull market to nice profits last year. I trimmed this position a little too early. In hindsight, that was the wrong move.
But we still ended up walking away with a nice profit. We sold CCJ for a 21% gain after it sliced through all its key moving averages.
At the end of the day, it’s about having a process. A process that positively exposes you to luck.
I’ll repeat: Put yourself in a position where you can make a lot of money if things break right… and where you can’t lose much money even if things go perfectly wrong.
Do that for long enough, and you’ll grow wealthy.
If you’d like to soak up my knowledge and experience, trade alongside me, and hopefully profit from my recommendations if I’m doing my job well, consider signing up for RiskHedge Live.
See you in the trading room!
Justin Spittler
Chief Trader, RiskHedge
