The Secret to Risk Management in Trading – Charles Faulkner’s Insights

00:00 - If you were making decisions, imagine 
if every decision you made was like,   "Oh God, I'm making the decision. 
It's really important." You know,   when you're doing this, you're getting 
all upset about this decision. I mean,   does that make it a better decision? Here's the 
thing: when you get into trading, a number of   people have this idea that if they're trading 
big amounts of money and putting on positions,  
00:18 - therefore, it ought to be really exciting and 
upsetting because of all the stuff involved. But the people who do it really well are 
minimizing risk. For them, it's pretty   much the same thing. Now, I understand there's 
also confusion about this in terms of cutting   losses. The neophyte trader, when you hear "cut 
your losses," will try to cut them to zero,   even if it means waiting for it to go 
down, waiting for it to come up again.
00:42 - Right? Then it goes down, "It'll 
come back because I don't want to   take a loss," which is different from 
the experienced trader who's going,   "I cut my losses. I never eliminate them. I 
just keep cutting them and cutting them and   cutting them." So the idea is you never 
eliminate risk; you're minimizing risk.