Larry Hite’s investment tips to become a successful trader – Most important characteristics of a trader

Hite explained some risk-management techniques that traders can use to minimise their risk and increase their return in his bestselling book-

• Use the worst-case scenario as your baseline-Hite said investors should always want to know what they are risking, and how much they can lose.

• Only risk a very small percent of equity on any single trade– He said investors should never risk more than 1 per cent of the total equity on any single trade.

• Spread your bets– Hite said traders should keep on diversifying and should make sure their diversified trades are not really more of the same kind.

• Stick with the plan– Hite said a good trading system is built on sound principles and research. but most investors lack the discipline to follow the system. Hence investors need to be disciplined and stick to their investment plan.

(Disclaimer: This article is based on Larry Hite’s book “The Rule: How I Beat the Odds in the Markets and in Life – and How You Can Too.”)