How important is risk management in intraday trading?
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Ask yourself, what would happen if you did focus on your trading process instead of profit?
Throughout my trading career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk, if you don’t take a hard look at risk, it will take you.
If your capital is the lifeblood of your trading career, most traders will take hits to their account and instead of stopping the bleeding, they will open the wound even more and hope they make it out alive.
Avoid big losses, here’s why.
A 10% loss requires an 11% gain to break even.
A 20% loss requires a 25% gain to break even.
A 50% loss requires a 100% gain to break even.
A 90% loss requires a 900% gain to break even.
The less it costs you to be wrong, the more opportunities you have to find trades where you are right.
90% of traders take themselves out of the game of trading before they even have a chance to learn how to properly trade, they get seduced by the euphoria of fast and big wins only to end up with nothing.
Focus on the process and not profits especially if you are an unprofitable trader.
Ask yourself, what would happen if you did focus on your trading process instead of profit?
When you open your mind to see beyond your emotions, you can see the market clearly. You realize that trading is very simple, make sure your wins are bigger than your losses. You know you can’t control your wins but you can control your losses by using risk management.
Every day you are paying for lessons in the market. Each loss is a lesson, the question is do you want to pay more or less for the lesson? If you want to be a trader that lasts, you learn lessons cheaply before they become expensive.
Credit: Quora