Diversification is another concept that need to be really understood by all investor. By using diversification you are certainly reducing exposure to the risk of individual item. And this is a good thing to do. But on the other side of the coin, if you are using too much diversification, not only you induce additional transaction cost, but also you are limitting your profit that you could earn. Let’s found out exactly why and how it works

Care have to be taken for those who wants to borrow money to kick start their investing journey. When people wants to borrowing money, often they only see the bright side where everything is going as planned and the profit will accelerate. But what happen if the trade is not going to the direction we want ? You may not only lose all of your money, but on top of that you still need to pay additional amount plus also the interest.

Simply put, Profit/Loss Chart (PLC) is the easiest and quickest way to understand your strategy to make profit. It can be used in any kind of trading, but it’s commonly use to illustrate option trading strategy (which can be complex, but then become easier after seeing the PLC). Just with simple glance, you can see from PLC: your break even point, where is your maximum profit, when you start losing money, when you start making money. Or in other word, what need to happen with the price for you to make profit.