[EDU] Why Risking 5-10% a trade is sucidal?

5 thg 12, 2023

Hello fellow traders , my regular and new friends!
Welcome and thanks for dropping by my post.

Here are 5 reasons why it is too RISKY and you should'nt do it!

> Challenges to recover

- Large losses require proportionally larger gains to recover. A 50% drawdown requires you to have a gain of 100% to BREAKEVEN!

> Emotional Stresses

- Trading with such high risk can amplify your stress and anxiety. Fear and panic may set in during losing streaks, impairing sound decision-making and leading to impulsive actions.

> Account Blow-Up Risk

- You just need to have a string of 5-6 losses and that will be devasting to both your mental and capital, which could lead to margin calls.

> Reduced Learning Opportunities

- Excessive risk can limit the number of learning opportunities for a trader. If a significant portion of the trading capital is lost quickly, the trader may not have the resources to apply lessons learned from mistakes. Why not risk 1-3% a trade, if at 1% you have under your belt , 100 times to lose [if you are that unlucky :)]!

> Market Volatility Impact

- In volatile market conditions, high-risk strategies can be particularly vulnerable. Sudden price movements can result in larger-than-expected losses.What if you got caught in a black swan event? Ouch...That sucks!

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