The most important question you should ask yourself before making an investment is- “How much will I lose if I am wrong?”.
Defining your risk is having absolute control of your investment. You should never say to yourself “I could make so and so much.” That is being emotional and irrational. No one knows how much the stock price of xyz stock is going to go up or down. All you can do is control the risk by knowing how much you can lose if you are wrong. And when you are right, making money feels so easy.
DCTH has a Low Risk/High Reward set up and I will show you how you can play it.
DCTH one year daily chart
DCTH’s one year low is $5.35 but is at $5.92 as I am writing this. Yesterday it made a move down to $5.65 and that did not last long. What is the risk here? The risk is about 60 cents. Yesterday it was even lower at about 30 cents. So in just one day the risk of this investment doubled. If I was to purchase a substantial amount of DCTH here I would hold it if the closing price sustains $5.35. I would need to sell it if it ever closed below $5.35, even by a penny or two. In order to be a winner in trading you must remain disciplined and patient. Both are key to a successful outcome.
