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Risk management, a successful trading system, determination, self-control, and ambition are the best friends of a trader.
Here are the biggest threats to a trader:
Stubbornness: Failure to cut losses and a continued pattern of staying in trades past their invalidation point.
Trading too big: Once you take on large positions, it's not a question of whether major trading goes wrong, but when. If your risk size is too high, a losing streak will easily empty your balance and create a large drawdown that is difficult to climb out of.
Arrogance: Believing that, for no apparent reason, you are smarter than most market participants. Expertise has to come before confidence.
Euphoria: The riskiest phase in your trading journey is the time you feel like an unstoppable god. Remain grounded in your trading plan. Some major losses are attributed to over-confidence and neglect of proper position sizing.
Opinion: Individual perspectives are irrelevant unless you have a fully functional flux capacitor or magic wand. The core factor that contributes to a profitable trader is their reaction to the price action.
Anger: An upset trader is a poor trader. Anger skews the expectation of a trader and leads to greater activity while you are poorly operating. Do not act forcefully, remain emotionally cool and trade the plan.
Adding to a failing trade: Doubling down on losing traders makes you want to hold it longer, hoping desperately for a turnaround. Trading aggressively against the trend is generally not the best idea, and adding to a losing trade is bound to create losses.
Bias: It's risky to get caught in bull-mode or bear-mode and can end in drawdowns if you keep playing on a team that loses day by day. Continue your flexible trading and go for the ride. Staying on the losing end of a strong trend is costly.
Chasing a trade: Unless you miss a great entry spot and then price moves away, it's best to wait out the trade. It's easier to have a strategy and be prepared for the next setup. Most notably, Risk /Reward proportions will be skewed if your entry is too far off.
Themself: the willingness of a trader to self-control can decide their long-term success. A successful trading system must be adopted in real-time market conditions after backtesting with consistency and correct position sizing. On your path to trading prosperity, the biggest enemy you'll ever face is yourself.
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