The eagerness of new traders to earn money comes at the expense of proper risk management, if it is even considered at all.
A trader must to begin with appropriate position sizing, the positioning of their stop loss, and their win-rate assumptions.
More than winning streaks or making fantastic judgments, the management of losing streaks and drawdowns will decide whether or not a business will be profitable.
Few people understand this, which is one reason why so few people are successful traders.
Risk management is the most important aspect of successful trading; without it, nothing else matters since, over the long run, the first losing streak wipes away any profits made in the past.
Any trader who doesn’t appreciate the dangers in the markets is doomed to fail if they don’t implement risk management strategies. The alternative is disaster.