I'll admit, I often behave like a muppet even if the better part of me knows better I think the obvious all comes down to having enough experience to see how an instrument should be traded and keep enough CONTROL on one own actions to actually trade it that way instead of following the sirens of CHAOS.
A whale in shallow water only has one possible tactic, since any movement will give him away. He must open his mouth and let the current sweep the little fishes right into his mouth....
I knew I had it when my account performance reversed. I also knew I found it when I stopped looking outside, at a chart or news or fundamentals. It's like in boxing when you no longer fear getting punched, because you can parry, slip, cover your chin with shoulder, etc. and then you are free to observe what the enemy is doing, over and over again..... Risk mangement is the answer.
A useful debrief, and only raw seat time with real money is going to prepare a garden variety muppet to do the right thing when the hard right edge looks like this...... Did you know the only way to get an airplane out of a death spiral is to push the stick / yoke forward and make it go down even faster, for a second or two?
It can't be the answer the OP was referring to. "What every trader has to realise, is that all the risk management and position sizing techniques in the world are of no use what so ever, unless the trader is aware of the obvious pre-requisite to trading any market."
Yes I did know and I also know it has nothing to do with hard right edge. Same with the above boxing analogy. Do you think you sound successful by denigrating (muppet) others and talking without saying much of value?
Actually, I disagree with the OP. Risk management and position sizing (RM&PS) is never of no use. Even the worst trading strategy in the world would be less bad with RM&PS. It has got me thinking though. RM&PS keeps losses under control and reduces drawdowns. But how much can it realistically improve the performance of a trading strategy? Can it turn an unprofitable strategy into a profitable one? I would bet that no amount of RM&PS could turn a mediocre strategy into a star performer. This tallies with the experience of a friend of mine. When he first started out trading he didn't put any risk controls in place, and blew up more than once. Having eventually learned his lesson, he started using rigorous RM&PS. But all that happened was he didn't experience catastrophic losses any more. He still didn't make any decent money from it. Clearly whatever his trading strategy was, it wasn't very good. All RM&PS did was stop him losing much money. Maybe this is the "obvious". If you want spectacular results, you better find a spectacular trading strategy. Talking about the worst possible trading strategies, can anyone think of any worse than these? Only ever going short in a bull market and only ever going long in a bear market. Catching falling knives. Shorting parabolic moon shots. Buying the worst performing stocks. Shorting the best performers. I doubt any amount of RM&PS would make these very profitable. .
Risk management is definitely not the key. Risk management can make a profitable system unprofitable, but it can never make an unprofitable system profitable.
Is position management part of risk management? Successful trading requires you to cut your losses / keep your losses small(risk management) and riding your winners (not taking profits too soon). There's no way around this. At the end of the day/week/month/year you tally up your wins and losses. Simply put, a successful trading system/approach/strategy then needs to either have: a. A high win rate if your win/loss ratio is equal. A very high win rate if you risk/bet more than you seek to gain. Typically associated with scalping. b. A low winrate if your win/loss ratio is say 3:1. This does however assume that you take your losses and keep them small while riding your winners. Because of human nature, we tend to do the opposite, i.e, let our losses run hoping they'll come around and cut our profits short (getting out too soon). So, low win rate and a win/loss ratio of 1:3 instead of the other way around. I think it's perfectly possible that many traders could have profitable systems in their hand, but fail to execute them for the reasons mentioned above. And the larger you trade the more these issues compound. Probably not the obvious, and maybe very obvious for most. Just pointing it out anyway.