This is part three of a five part series of the four biggest mistakes traders and investors make which costs them time, money and usually self-confidence when trading stocks, ETF’s or futures trading strategies.
The Four Biggest Mistakes
1. Lack Of A Trading Plan – Part I
2. Using To Much Leverage – Part II
3. Failure to Control Risk
4. Lack Of Self-Discipline
Mistake #3 – Failing to Control Risk
If you were to engage in something risky like skydiving, you or a team would check your parachute to be sure its packed properly, strapped on to your body correctly before you jumped out of the plane. If for some reason you were not told how to use the gear, like when to pull the ripcord etc… I guarantee you would ask them before you threw your body out of the plane.  There is a real fear of dying so you naturally make sure you are in control of what you are about to do so your risk is managed and live another day.
But when it comes to trading this is not the case and you and I both know a good part of why. We all know people who have said rude things, quit jobs or broken up with a girlfriend or boy friend over the internet (email/text message). Let’s face it, it’s easy to be brave online and do things we would never really do in person. Heck, some of the emails I get from readers of my free weekly articles I post are so rude and some are threatening that all I can do is laugh. Because I know these people would likely never say the things they did to someone they have never met, and do it to their face all because they think my FREE short term market prediction does not fit their bias. I think you get the point here…
So when it comes to trading individuals get this what I call “Online Courage†and this is why so many fail to protect their capital when trading. They simply don’t see their money so it does not feel at risk (out of sight is out of mind). This lack of fear is what leads to loss of risk control.
