Just like you would have entry criteria and exit criteria well established before entering into a trade, same applies to starting or running businesses.
One needs to research various possible trades. Here remember the real estate analogy. You should look at 1000 listings; short list 100 plots to closer scrutiny online; pick the best 10 to go physically see. Decide on 1 to buy.
Use risk reward ratio for short listing. Establish absolute minimum risk-reward ratio. In trading, I need atleast 1:4.
At the time of the buy, you need to establish stop loss price. How much loss can you afford? How long are you willing to persist? What will you do if trade is going in the opposite direction? What will you do if trade is going in the favorable side? When will you cut your losses, put your tail between you legs and let go?
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