I understand and in fact agree with your note of caution. However in my case the scale at which this has happened in the recent past largely goes beyond this level of caution, you can trust me on that one - unfortunately. ^^ I'm probably an outlier here when it comes to regularly not taking a trade (akin to a horse refusing an obstacle in a competition despite his jockey's efforts), even when just about everything I see is shouting out loud to just "TAKE IT!" - but I thought I would mention that "risk" anyway.
If you are trading full time, it IS your career. It's a career that allows a great deal of flexibility and worth staring at charts 12 hours a day for a couple years. If I want to become a doctor I stare at books and computers and sit through lectures for far more than 2 years and when my education is over I'm likely well over $100K in debt. Then I embark on a career full of uncertainty, much like trading. Just as a sudden adverse market event can hurt me as a trader, as a doctor I may be hit by a malpractice lawsuit that results in unsustainable insurance rates. As an engineer, I may be laid off in a recession. As a government worker with a secure well-paying job, the building I work in may be the target of a terrorist attack. As a young promising sports star, an injury may end my career. As an airline pilot, a mechanical malfunction may result in a fatal crash. Pursue your passion, you only live this life once. I still believe the most underestimated risk in trading is your own ego, whether it's the inability to accept a loss (to be "wrong") or the inability to have faith in a proven system because you believe you can do much better than the system. You can pick up one of many excellent books on trading or locate free educational materials on-line and learn how to trade. You'll learn risk management and position sizing, you'll learn to identify high probability price patterns that give you a statistical edge, and you'll learn how to target reasonable profits in relation to your risk and how to take even more when the market is offering it. Since all this information is available through inexpensive books and on-line for free, how is it possible that the majority of traders fail to become consistently profitable? What causes a trader to put on a trade before price fully signals the appropriate entry? What causes a trader to chase an entry when s/he misses the entry price that allows for an acceptable risk/reward ratio. What causes a trader to decide to trade without a stop or to trade dangerous size because a setup looks so good? What causes a trader to believe s/he knows when price is too high and is "due" to reverse when the majority of market participants are bidding price higher and s/he has no idea how many additional people will bid the price even higher still because they're afraid they'll miss the move or they have to cover their short position before they blow their account? The cause of these mistakes is the trader's belief that s/he knows more than the market, the belief that all those market participants are idiots for buying this high (or selling this low), and the belief that s/he knows what's going to happen next. The key to profitability is to surrender to the market (to the price action), which will carry you along with it most of the time if you allow it to happen, and to surrender to your risk management rules, which means your ego will have to accept being "wrong" at times.
And/ or The government decides overnight to ban short selling financials (when someone very close to my heart was long SKF from the previous day) Good times :eek: RN
Well I guess the discussion is drifting away from the original OP intent and extending in scope, not that it's bad by any means... There are simple *facts* that a trader tend to ignore, or forget, or worse yet pretend to ignore while in position (just because these facts don't go along well with their current trade) - I think denial has already been cited here. -> Simple fact: there is NO way to know for sure what will happen next. NONE. -> Simple fact: the market doesn't give a sh*t if you're long or short, heck it doesn't even care if you're about to go broke - it juste ploys ahead the way it "wants" to -> Simple fact : I have run "random walk" type computer simulations, dozens of them, and I'll tell you, in most of them I could easily identify "patterns" like "S and R areas", "double tops", or "retracements" in a "trend" or "breakouts from a range". The very same I tend to identify on real life market charts. Even though these were *randomly* generated time series data... So? So, our mind/brain is built and educated not only to try and identify those supposed patterns, but even to find causes for these patterns and hence elaborate future price action based on our false perception of the reality. A trader needs to keep these plain *facts* in perspective while trying to manage his/her position - and emotions. Easier said than done, I know...
the most underrated risk is overestimating your smarts. this is NOT a flat playing field "I have to laugh, because I've outsmarted even myself. My enemy, my foe, is an animal. In order to conquer the animal, I have to learn to think like an animal. And, whenever possible, to look like one. I've gotta get inside this guy's pelt and crawl around for a few days." Carl Spackler_caddyshack don't outsmart yourself you ain't that smart
Well, sometime the other guy's excessive greed can be your gain. That is, unless their account size is a thousand times yours, in which case you're essentially toast.