To be very clear, the horror stories you hear about day trading have NOTHING to do with the technical chart patterns, or that trading doesn’t work, they are almost entirely down to lack of emotional discipline by not following their trading plan. This usually means (but is not limited to); not taking stop losses, risking too much money too soon, cost averaging down on LOSING positions, and not stopping when your trading plan/money management says to quit for the day.
Traders have very specific rules written in their trading plan. For example, one of the key components to my trading plan is that I am not allowed to lose more than 3 trades on any given day. This means that if I am risking $300 per trade, and I lose $900 throughout the course of the day, I must stop immediately. If I don’t stop then I am breaking the rules of my plan and endangering the favorable odds of my positive expectancy. This would be a poor example of money management, brought on by a lack of emotional discipline, which sadly is all too common in the trading world.
