Good traders are known to be masters of risk management. Risk management includes following a detailed trading plan, setting stop and limit orders and managing traders without succumbing to emotions.
Good traders also tend to follow a robust trading plan that focuses more on ensuring that the traders do not lose their capital, while the profits are seen as only secondary. As part of this pursuit in achieving trading excellence, professional and seasoned traders follow the concept of setting limits on their losses, on a daily, weekly and even monthly basis.
Trading with limits ensures that the traders do not end up sabotaging themselves in the heat of the moment as emotions can often override logic when a trade turns into a loss.
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To be a profitable trader you must overcome these ten things:
- You must beat the market benchmark you are competing against or you might was well just buy and hold that index.
- You must beat your emotions by following a trading plan.
- You must beat your ego by taking losses early when you are proven wrong.
- You must beat your greed by managing your position sizing to limit your risk exposure.
- You must beat your fears by letting a winning trade run when there is no reason to exit.
- You must beat your desire to predict the future by reacting to what price action is actually happening.
- You must beat the trader on the other side of your trade.
- You have to make enough money to beat your commission costs.
- You must not let the market beat you up with too many losses and make you quit.
- You must beat the naysayers who think active profitable trading is impossible.
The original post is authored by Steve at newtraderu.com and is available here.
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