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A trader’s best friends are risk management, a winning trading system, perseverance, self control, and passion. Here are a trader’s worst enemies:

  • Stubbornness: Not cutting losses and sticking with trades that are not working.
  • Arrogance: Believing that you are smarter than the majority of market participants for no apparent reason. Competence must come before confidence.
  • Opinion: Opinions about the future are useless unless you posses a fully functional crystal ball or time machine. The thing that leads to being a successful trader, is trading the price action in the present moment.
  • Bias: Getting stuck in bull-mode or bear-mode is dangerous and can lead to losses if you keep playing on a team that is losing day after day. Stay flexible in your trading and go with the flow. It is expensive to stay on the wrong side of a strong trend.
  • Euphoria: The moment you feel like an invincible genius is the most dangerous moment in your trading career. Stick with your trading plan and stay grounded. Most big losses come after big wins due to over confidence and abandonment of proper position sizing.
  • Anger: An angry trader is almost always a bad trader. Anger skews a trader’s perspective and leads to trading bigger when you are trading badly. Don’t trade mad, stay emotionally neutral and trade signals.
  • Adding to a losing trade: Making your losing trades bigger makes you want to hold them longer, desperately hoping for a rebound. Trading aggressively against the trend usually does not work out in the end, and adding to a losing trade makes a mistake compound.
  • Chasing a trade: If you miss a great entry point and then it trends away from your entry level, it is best to avoid the chase. It is better to have a plan for the next great setup, and be patient. Risk/reward ratios are skewed if you are too late to your entry.
  • Trading too big: If you take on large position sizes, it is not a matter of if the big trade goes bad, but when. When your position size is too big, a losing streak in an ever-changing market can quickly drain your account and create a big draw down in trading capital that is hard to climb out of it.
  • Their self: A trader’s ability to control them self will determine their long term success. After research and back testing, a winning trading system must be implemented in real-time market environments and followed with discipline and proper position sizing consistently. The biggest enemy you will ever face on your journey to trading success is yourself.