You’re absolutely correct that most people don’t factor in leverage. Stops and leverage are only the fundamentals. Most traders don’t even have those down. Once they get that down there’s mindset. There’s psychology. There’s discipline. Then there’s the analysis. They need to be able to properly qualify the market. On top of all that, they need passion for the game. The market is a huge game of probabilities. They need to be objective always and only look at facts. If they ever catch themselves saying “I think” they’re being subjective. Most of these guys yesterday don’t have what it takes. They hold on to a bad trade like they’re holding on to life. They view a loss as a negative reflection of who they are and it’s the furthest thing from the truth. They need to learn to lose first before they ever become profitable. You could have given the best trading system in the world to some of these guys yesterday and they would have found a way to blow up. It’s not the way trading works. You win a bunch of 1 R trades and lose a few. Keep managing the risk and about 10 times a year the bulk of your profits will come from those handful of trades that become huge winners. You need the discipline to stick to your trading plan. The mindset to always look at facts only. The passion to review your trades when the market is closed. Did I mention record keeping?
I don’t think you have these issues. But a lot of these guys that lost $10,000 or $50,000 or whatever crazy amount. That’s not trading. And how many of them got lucky making some back today? Luck isn’t going to always be there. When you find yourself praying that the position comes back the game is up. The first mistake they made was say “I think” yesterday. I think the market has gone too far down. I think it’s going back up. The market could care less what they think. Once they stop thinking and start looking at facts they might have a fighting chance.
