This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.

In this video Jack Schwager schools us on the importance of focusing on the RIGHT thing in markets — risk management.

Too many amatuer investors are focused on the wrong thing when they’re trading. They’re obsessed with entries and finding the next hot stock. That’s part of the reason why there’s so many investing newsletters and youtube channels spitting out so many stock picks all the time. That’s what people want. But it’s not what they need…

The best investors have win rates as low as 30%. So if that’s the case, does the specific investment you’re making matter as much as the need for proper risk management? The home runs are so rare, most of the time you’ll just be defending, trying not to lose. That’s why the best investors are so focused on their downside and risk management.

Professionals understand that risk management and cutting loses are way more important than any other part of the investing process. They know they’re going to be wrong a lot, so they need to make sure they’re losing as little as possible when they are inevitably wrong.

In addition to risk management, general trade management is extremely important. 90% of successful trading happens after you’ve already entered a trade. The tough part is figuring out how to manage it. When to take profits, when to add to the position… all those decisions add a lot more to your bottom line than the simple entry. You are better off focusing on that process than the next hot stock.

To learn more, make sure you watch the video above!

And as always, stay Fallible out there investors!

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***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only, NOT INVESTMENT ADVICE.