It is widely accepted that when you start trading, you never consider the most critical issues to becoming a consistently profitable trader. Often, all you can think of is how much money you are going to make and how you cannot wait to start.
When it comes to managing risk, an often-overlooked component is probability, or the likelihood of something happening. Even then, I strongly believe that many traders misinterpret the rules of probability. Some believe that if they have an unprofitable trade, somehow this increases the chance that their next trade will be profitable. If they incur a string of losses, they believe that their chance of a profitable trade increases as each unprofitable trade passes.Read More