Take precautions when taking risks.
Most people are terrified of losing, so they don’t take any risks at all. However, this actually limits your success significantly, since if you do not take risks, you do not give yourself the opportunity to win big. Keep in mind that you will sometimes lose some gambles—but this should not hold you back from trying again.
Follow the above rules and you will increase your chances of winning big while decreasing your chances of losing out.
Ensure that all the gambles and risks you take are independent of each other.
For example, do not make multiple investments in the same industry, because if one goes bad, they all go bad. Instead, spread your investments out over multiple companies.
Make sure that the greatest possible loss you could suffer would not affect your total wealth so much that recovery would be impossible.
Before taking a risk, always evaluate all the pros and cons first.
Steer away from long shots as much as is possible.
The probability of winning is very small in these cases.
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