The biggest mistake a trader can make is to be stubborn. If the evidence changes, or if the market is acting differently from what you had envisioned, then get out/or even reverse. Do not indulge your own ego.
It`s not about being right. It`s about making money.
Money Management - Keep Losses Small
Risk : Reward
Risk reward is the most important aspect to managing your money in the markets. However, many traders do not completely grasp how to fully take advantage of the power of risk reward. Every trader in the market wants to maximize their rewards and minimize their risks. This is the basic building block to becoming a consistently profitable trader. The proper knowledge and implementation of risk reward gives traders a practical framework to do this.
Many traders do not take full advantage of the power of risk reward because they don’t have the patience to consistently execute a large enough series of trades in order to realize what risk reward can actually do. Risk reward does not mean simply calculating the risk and reward on a trade, it means understanding that by achieving 2 to 3 times risk or more on all your winning trades, you should be able to make money over a series of trades even if you lose the majority of the time. When we combine the consistent execution of a risk / reward of 1:2 or larger with a high-probability trading edge like price action, we have the recipe for a very potent Commodity trading strategy.