It’s no secret that financial trading comes with loads of risks, particularly in the case of losing hard-earned money.

Renowned trading psychologist Brett Steenbarger has identified that there are also other risks involved which lots of us easily overlook. Do you end up guilty of any of those, too?

1. The chance of boredom

Numerous individuals are drawn into trading due to prospect of creating big money in a comparatively short span of time.

But sometimes, there’s just not that much motion out there or your trading system simply isn’t catching any of the moves.

If a trader is impatient, he could resort to abandoning his trading system or could find himself forcing trades.

For those who end up fidgeting and may’t wait to get a bit of the market, it will be higher so that you can take a step back out of your charts.

2. The chance of “drawups”

We’re fully aware of the hazards and pains of drawdowns, but did you understand that you furthermore may face risks when your account rises in value or incurs a “drawup”?

That’s right! Traders also experience a risk after going through a series of wins.

After having a successful streak, many traders are inclined to make bad trading decisions due to overconfidence. They find yourself increasing their position sizes to unmanageable levels, taking too many trades, and abandoning their trading plans.

That is precisely why it’s essential for traders to all the time keep their emotions in check. Failing to accomplish that can lead you to be lax together with your trade execution. Remember to all the time stick with your trading plan and keep your ego in check!

3. The chance of sequencing

Irrespective of how well you manage your trades or how consistent your trading system is, you never really know prematurely the sequencing of your winning and losing trades.

A trader experiences sequencing risk when he begins to take the sequencing of his wins and/or losses out of statistical context.

As an illustration, you might undergo a series of wins and think that you simply’ve mastered the markets, which may easily result in overconfidence.

Alternatively, a series of losses may make you doubt yourself or your trading strategy, leading you to deviate out of your trading plans and make bad trading decisions.

Even times of alternating wins and losses may be perceived the incorrect way. For those who see your account balance just bouncing up and down with none real progress, you might take it as an indication that you simply’re not improving and lose motivation or surrender altogether.

Luckily, there may be a strategy to avoid this dangerous mindset. Through the use of a trading journal, you may help put things into the correct perspective and keep the larger picture in mind.