Never risk more than 1% of your total account on a single trade. If you have a $50,000 account, your maximum loss per trade is $500. This immediately kills the ego. You cannot "average down" or "hold and hope" because the loss cap is physical.
When you enter a trade, your brain immediately scans for information that proves your thesis. You ignore the bearish divergence on the RSI. You dismiss the insider selling. You only read the bullish analyst report. You aren't trying to make money anymore; you are trying to win an argument with the market. Being Right Or Making Money Pdf
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While no single official PDF exists under that exact title, the concept is distilled from classic trading psychology resources (including Van Tharp’s Trade Your Way to Financial Freedom and Jack Schwager’s Market Wizards ). Here are the core principles: Never risk more than 1% of your total
At first glance, this sounds like a paradox. Logic suggests that to make money, you must be right about the direction of a stock, the timing of a cycle, or the value of an asset. However, seasoned traders understand that an obsession with "being right" is often the single greatest obstacle to profitability. You cannot "average down" or "hold and hope"
Most traders check their profit/loss (P&L) every five minutes. If the P&L is green, they feel smart. If it is red, they feel stupid. This is dangerous.
Many traders refuse to take a small loss because it would prove their initial analysis was wrong. They double down, hoping to be proven right. Eventually, a small loss becomes a catastrophic one.