The #1 reason traders find it hard to follow their risk management plan.

[Bright_dhykseen]

Risk management in trading, I believe, is a skill and a discipline that every trader must-have.

The absence of risk management in a lot of trading systems today has led to lots of blown accounts. Now, what makes traders find it hard to follow risk management since it is very important?

The #1 factor causing this is Greed.

In my opinion, Greed is just one psychological factor that causes havoc in a trader's journey as it opens room for other trading errors.

With Greed, you find yourself overleveraging, putting on trades that are not ready, in fact you will be too greedy to set a take profit because you ant more and more from the market.

Greed is one factor that messes up one emotional discipline and gives room for irrational decisions.

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.” – Victor Sperandeo.

What other factor do you think ruins risk management? , share your thoughts and experience!  

[bigcash2011]

Yeah we can say that greed and ego are the two biggest factors that force the traders psychology not to use risk management and not to use stop loss or cut losses. It has been seen that people have burnt their accounts multiple times but still they are hesitant to use proper money mangement strategies out of greed and their egoistic approach.

[Bright_dhykseen]

Yeah we can say that greed and ego are the two biggest factors that force the traders psychology not to use risk management and not to use stop loss or cut losses. It has been seen that people have burnt their accounts multiple times but still they are hesitant to use proper money mangement strategies out of greed and their egoistic approach.

Yes, you're right. Ego is one big thing.

I always had an ego for a very long time in trading. Till realized I needed to do the needful to be successful as a trader.

[Lorokan]

I may have a different opinion, but i believe that most times it is not about ego or greed when risk management fails.
Most times during trading, the market moves away from the predicted movement and does something entirely, which SL cannot stop, and it doesn't matter if you run a risk management plan or not.

[AmoreJaz]

I may have a different opinion, but i believe that most times it is not about ego or greed when risk management fails.
Most times during trading, the market moves away from the predicted movement and does something entirely, which SL cannot stop, and it doesn't matter if you run a risk management plan or not.

it may be true but most traders of course wanted good returns during their trading, so they always predict in favour of them. they act according to what they thought will happen but its the other way around. if a trader will just be conservative with his calculations, he will not lose a lot of money, if in case he will lose that particular trade. but of course, the reality is different.
when you are already in the market, you suddenly change your decisions for the hope that you will get more money. i think thats where most failed, changing their strategies when they are already in the trading market.

[Wexnident]

Greed isn't that negative of an attitude. Although it is mostly negative at times (if it goes overboard), it can be actually helpful sometimes, so fully blaming Greed isn't entirely correct, but it isn't entirely wrong either. Risk management plans are in the end, just plans, and plans are bound to change IF and only IF someone actually understands how the market works.

There are times that you need to trade even though your plan says no all because of the fact that there's a chance and a high one at that. IMO, most mistakes that actually happen in trading is because the trader fails to understand the movements, well I mean, no one does most of the time but I'd say that he was just unlucky it didn't go as what he planned. IT is important though that he could minimize any losses that he got from changing plans though.

P.S. OP your BTC profile link in your linked post doesn't work. Just sayin.

[alkuluku]

Yeah we can say that greed and ego are the two biggest factors that force the traders psychology not to use risk management and not to use stop loss or cut losses. It has been seen that people have burnt their accounts multiple times but still they are hesitant to use proper money mangement strategies out of greed and their egoistic approach.

Yes, you're right. Ego is one big thing.

I always had an ego for a very long time in trading. Till realized I needed to do the needful to be successful as a trader.

greed is the biggest thing for traders which increases risk for them.

[maydna]

I agree with you OP. Greedy is the biggest problem that every trader face, and even the pro trader will have the same problem. But if we still stick on the target price that we want, we will have a chance to eliminate the greed because we know that when the price can jump in a short time, the price will not stay on that price for a long time or the price will not always increase higher than that price.

We need to see when we need to sell the coin, especially if the price can touch the target price want, and don't expect to see the price will always go up more than the target price we have. Yes, it is hard but we need to try more and more so we the greed is not posses us and prevent us to make a profit while we can.

[alkuluku]

I agree with you OP. Greedy is the biggest problem that every trader face, and even the pro trader will have the same problem. But if we still stick on the target price that we want, we will have a chance to eliminate the greed because we know that when the price can jump in a short time, the price will not stay on that price for a long time or the price will not always increase higher than that price.

We need to see when we need to sell the coin, especially if the price can touch the target price want, and don't expect to see the price will always go up more than the target price we have. Yes, it is hard but we need to try more and more so we the greed is not posses us and prevent us to make a profit while we can.

If we stick to a target price then we will need to hold for long term investment and eventually it will decrease our investment risk.
but most people do not understand this.

[Cesar22]

You are absolutely right OP, once a trader starts to be successful, they'll keep on pushing to make more and more money

[maydna]

~snip~

If we stick to a target price then we will need to hold for long term investment and eventually it will decrease our investment risk.
but most people do not understand this.

The fact is most trader become greedy when they see the price jump, and I already experience that before in my beginning of trading. At that moment, I am missing the best moment to sell some coins at the very highest price, and I can make a big profit, but then I realize that the price cannot still increase, but that is too late. Although that is too late, I can make a profit, but that is not bigger than the last time of the highest price.

From that experience, I always try to remember to close the trade whenever I see the very highest price, so my profit can be at the top rate. That is one of the best lessons for me that I always keep in my mind.

[The Cryptovator]

Risk management isn't very easy task for traders. If a trader lost funds during trading then its effect psychologically and he become more crazy to recover his funds. We have lack of patience and greed is another dangerous behavior for traders. You may proceed to risk managment only when you may control your emotions & greed and trade with patience. I believe only professional traders with high skill is able to done their risk managment. For general traders like us, most complicated things.

[exstasie]

Risk management isn't very easy task for traders. If a trader lost funds during trading then its effect psychologically and he become more crazy to recover his funds. We have lack of patience and greed is another dangerous behavior for traders.

This is why 90% of people should not be trading.

I honestly understand why laypeople compare day trading with gambling, because that's literally how most people treat it. They enter trades with no plan based on greed, they exit based on fear, they don't back test their strategies, they let losses run, they double down using leverage, etc.

It's no wonder Wall Street chews up retail traders and spits them out. Trading is very challenging psychologically and requires rigorous rule following.

[sheenshane]

snipped-
Greedy is the biggest problem that every trader face, and even the pro trader will have the same problem.

You're probably referring to the emotional aspect of being impulsive and not greediness for it's our nature to have a sudden and unreflective urge to act if we find things in an instant is favorable to us without any second thought. Though I may say that greediness is the main element or the endmost factor that a trader loses their risk management but there are still some reasons why it always happens like being impulsive and having a less strategic plan that gives them a wrong response to any sudden changes on the market.

In the end risk management in trading can be considered as the best tool and could be the worse depending on how we handle it.

[Coin_trader]

You are absolutely right OP, once a trader starts to be successful, they'll keep on pushing to make more and more money

Most of the pro trader has the mindset earn more and more profit after a successful run because no one else will be contented to a single success if trading is your source of income? This so called Greed factor that OP mention are for those traders doing leverage trading with high leverage which is obviously not in the traders official handbook.

The #1 common cause of traders loss of money is the patience to wait on the perfect opportunity to enter and exit in trading. I believe TIME is the best factor that affecting traders risk management considering that traders that we are talking about here are PRO traders and not those casual traders that don't have any idea on the fundamentals of trading.

[Latviand]

Risk management isn't very easy task for traders.

Yes, but if you're willing to do that, you can achieve that. Risk managent is necessary and you need to deal and do that for your own improvement in trading. Most of us here are so stubborn when it comes to following risk management, we need to improve our self-discipline in order to become more effective in trading.

If a trader lost funds during trading then its effect psychologically and he become more crazy to recover his funds. We have lack of patience and greed is another dangerous behavior for traders.

That's the reason why we also need to practice controlling our emotions and avoid those kind of mindsets. If you are greedy enough to recover your less, that will make you double it. It is not easy to perform self-discipline, yes, but you also need to work hard for you to achieve it. Attitude should not ruin your trading, always practice those things whenever you trade.

I believe only professional traders with high skill is able to done their risk managment.

But everyone of us can grow more in trading, learning has no limit. All of us can improve and become an effective trader, we just need to practice it every time we perform our strategies before and during transactions. Experience will give us more lesson and we need to reflect on the results of our trading. All of us can perform risk management if you are willing to minimize your risks, remember that.

[davinchi]

The real hard thing is when they change the way they made more money to try and make even more money. You figured out a way, you are profiting, why are you changing this? I have seen too many people who did regular buy bitcoin, hold it, sell when its higher type of deal which is simple yet works most of the time, if you know when to get in and when to get out that is a perfect way to make a profit.

They then go into altcoins, they go into ICO, they go into leverage trading, all of a sudden they are on 10 different methods and they are losing like crazy. Anyone with a smart mind would know that if you are doing something and you are good at it, do not try to change too much of it and make it into something bigger and fail, just keep at it and you will be fine with what you know already.

[Robust Crypto]

Risk management in trading, I believe, is a skill and a discipline that every trader must-have.

The absence of risk management in a lot of trading systems today has led to lots of blown accounts. Now, what makes traders find it hard to follow risk management since it is very important?

The #1 factor causing this is Greed.

In my opinion, Greed is just one psychological factor that causes havoc in a trader's journey as it opens room for other trading errors.

With Greed, you find yourself overleveraging, putting on trades that are not ready, in fact you will be too greedy to set a take profit because you ant more and more from the market.

Greed is one factor that messes up one emotional discipline and gives room for irrational decisions.

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.” – Victor Sperandeo.

What other factor do you think ruins risk management? , share your thoughts and experience!  

I can confirm that this is the case.

I'm wayyyy too greedy...

[ScamViruS]

One of the things traders have is that when they make a profit in a trade, their greed increases. They then take some trades, without proper analysis. The result is very bad, he loses even more than what he made profit. As a result of this loss, it’s effect psychologically. He then makes the wrong decision to recover the funds.The trader moves to high risk margin, leverage trading to recover funds in less time. But this turned out to be another biggest mistake, and eventually loses all his funds. In fact, greed is more prevalent among traders who have less patience. So the trader who can control his greed can be a professional trader.

[its-a-me-mario]

The human element is definitely the hardest thing to move past when trading. I'm a big fan of tools that help you stick to your strategy, whether it's a PineScript indicator on TradingView or your own custom spreadsheet or something else, a tool lets you write the rules once and remind you that you are or aren't following your own rules.