The single most important thing in trading after you have refined your strategy and fully understand how it works, why it works, when it works and when it doesn't work is your composure.
If you want to make it big in retail trading, i'm talking along the lines of making £20,000, £30,000, £50,000 or more in a day or week consistently then you need to understand compulsive trading.
What is compulsive trading put simply ? It is in essence a lack of composure. In a sense you become the emotional effect of your own actions:
1) You place a trade or make a decision.
2) You experience a confusion or a disconnect. You wonder if that was the right decision,
3) You hyper-fixate on the markets. This leads to you being the effect of the markets and makes you liable to make the three trading mistakes (See Article titled "the three trading mistakes" and "flawless trading")
The reason that re-entry trades, Irrational/stupid trades and over-risked positions are bad is not because you should never do them or they always lose. The reason they're bad is because you have become the effect of the market and when you become the effect of the market; (Lose your composure; Start trading compulsively as these are all the same thing)
You start to make decisions and take actions which is counter productive to your basic goals and purposes which is (To maximize wins and minimize losses)
Most retail traders start off not having any composure when it comes to the financial markets and trading live. By understanding the different component parts of compulsive trading and by doing report reviews a trader can develop that composure necessary to handle a life changing amount of money.
Give an average intermediate trader $1,000,000 to trade with and why ? because if he lacks the composure necessary to handle that amount of money he will trade compulsively, he will misapply his strategy and hyper fixate on the markets- in truth it could actually stress him out to the point where he ages physiologically. It could cause him to have emotional crashes and leave him depressed.
I stress this point as you long-term success and prosperity in trading depends more on your composure/ability to handle large amount money. This is why you hear stories of people who win the lottery or life changing amounts of money only to end up broke or in a worst position than before tier lottery win.
First things first when it comes to handling a large amount of money you need to know what to do with it. In trading, this takes the form of your strategy. You need to be confident in applying it, using it and getting results. However you use of your strategy is impeded by your composure (Or lack of it).
Your composure is directly correlated to your ability to apply your strategy effectively.
For a visual aid I have created a scale which will rank the behavior/attitude of an individual in terms of composure.
The lower down on this scale you are the more likely you are to blow you trading account, There is the factor which is equally as important and that factor is skill/ability (Which is essentially knowing ones strategy and understanding ones strategy and the markets itself)
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