The Ninth Cardinal Mistake:

Or risking too large a percentage of equity on any single trade, either with too large a dollar risk per contract or by trading too many contracts for any single trade or by trading too many commodities.

This also happens after a period of success when you "know" that the market is going to do something. You are so certain that this is going to be a really big move that you risk much more than the maximum 10% of your equity. Already emotionally out of balance, all it takes is a couple of limit moves against you and you are bust.

To prevent this mistake from occurring, you must have a hard and fast rule that you can risk no more than a certain percentage of your equity on any trade regardless of how good the trade looks.

Next: The Tenth Cardinal Mistake: Failure to Remove Profits From Your Account

Back to Cardinal Mistake #8

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