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This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.

Today we’re going to talk about 3 reasons why your trading account isn’t growing like you want it to.

More than half the battle in markets is against yourself. You can know everything there is about economic theory, technical indicators, balance sheets… but unless you master yourself and your psychology first, you’ll never succeed.

Reason number one your trading account isn’t growing is because of a lack of a trading plan. Sun Tzu once said:

“Now the general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations to defeat.”

The same goes for trading. The best traders gauge different scenarios of what could happen for each one of their trades. They then establish a plan how of they’ll manage that trade, should any of those scenarios comes to pass.

Planning ahead helps prevent emotional self-sabotage in the heat of the moment. Your trading plan should be written in stone and followed out exactly while you’re in the trade. And then once the trade is closed out and over, you need to go back and reevaluate that plan.

The second reason your trading account isn’t growing is a lack of proper risk control. As Peter Brandt said:

“Consistently successful trading is founded on solid risk management.”

Most traders focus too much on finding trades when they should be focused on capping off their downside. The number one mistake new traders make is betting too large on each position. Instead of betting 2% per trade, they bet 20%. This works for a while until you get a bad losing streak where you squander away everything you’ve earned plus more.

The third reason your account isn’t growing is due to not understanding the macro environment.

Make sure you watch the video above for solutions to all these problems!