On Thursday, the Federal Open Market Committee – the Fed’s monetary policy committee – will meet to discuss whether or not to raise interest rates for the first time in roughly nine years.
The recent selloff has cast some doubt on what they might do – raise rates and hope for the best, or keep rates near historic lows through the end of the year to let the market find its legs.
But no matter what the Fed decides, you’ve got to stay in the markets. I’ve said before that one of the costliest mistakes you can make as an investor is to sit on the sidelines. If you want to make money, you have to be in the markets. So if you want to win – no matter what the central banks do, and no matter what the markets do – you have to keep playing the game.
Sometimes, that’s easier said than done, I’ll admit. But the easiest way to stay in the markets in tough times is to make sure you’ve got a sound risk management strategy.
In fact, when it comes to making consistent money in the markets, controlling your risk in your trades – and managing your losses – is just as important as anything else you do as a trader.
Today, I’m going to show you why options are the best risk management strategy in the markets – and four concrete ways you can use them to protect your investments and manage your risk.
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