Why the Big Losers When Trading?
Although most traders are familiar with money management, they are inevitably ignored. Trading books are littered with stories of traders losing one, two, even five years’ worth of profits in a single trade gone terribly wrong. Typically, the runaway loss is a result of sloppy money management, with no hard stops and lots of average downs into the longs and average ups into the shorts. Above all, the runaway loss is due simply to a loss of discipline.
Instead of looking for home runs, win the game by hitting singles. Too many beginning traders look for that big trade. All traders are aware of the story of George Soros who “Broke the Bank of England” by shorting the pound. He earned for himself and his client’s $1 billion dollars in a single day? The reality for most traders is that, instead of experiencing the “Big Win”, most traders succumb to just one “Big Loss” that can knock them out of the game forever. There is always a draw down out there to stop someone from trading.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE