"Cut the losers only, let the winners run". One of the quotes that are pretty popular among beginners and experienced traders. Sounds pretty simple, but let's take a look at it in practice".
On the left-hand side, we have illustrated the recent trading history of a patient trader, and on the right side, that of an impatient one. Taking a close look at the recent trades of the patient trader, we can observe that he has a solid trading plan, rock-solid psychology and discipline, and a very good risk management plan. Out of 5 trades, he has only won 3 of them. But due to the fact that he risks only 1% of his trading capital per trade and sets realistically-positive Take Profit levels that vary depending on the market, he makes really appetising returns.
On the contrary, the impatient trader has everything to fail. If we take a look at the recent trade history, we can notice that this trader neither has a well-defined risk management strategy nor any discipline or patience (well, the name says it all).
There is a common misconception in the world of trading that states: "the higher your win rate is, the more profitable you will be in the markets". This statement is absurd and totally incorrect. No matter how high your win rate is, if you are not risk tolerant and you put all of your eggs in the same basket, you will be far away from reaching the doors of consistency and profitability.
To add, patience and a strong psychology are heavily linked and cannot exist without each other. Hence, once you teach your mental state the importance of the ability of sitting on your hands and waiting, your trading journey will head in the correct direction.
Enjoy the read!