In the next few lines, I will describe the most useful piece of information I was ever given for making money on the $TSXV. This primordial rule of risk management was handed down to me by a banker at GMP Securities back in 2005 when I started out in this business. Had I followed it, I would have been far richer, less stressed and likely on vacation much more often.
The rule: If you are up 100% (a double) on any position, reduce your size by half – eliminate all the risk. Simple. In trading terms this is called scaling out.
In this market, with almost everything trading at a significant discount, 100%+ gainers will be commonplace. Be smart take money off the table and let the risk-free position ride.
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