As most trading books will explain, risk management is the key to survival and what trading is really all about. While it may sound like a cliché, the hard truth is that consistently profitable trading, in my opinion, significantly depends on proper risk taking and risk management combined. Winning traders follow a tried-and-tested plan based on rules or on a defined set of criteria. Winning traders recognize the importance of risk management and of money management. As you will release, among losing traders is that most guess and hope and usually say, when asked about placing a stop-loss or taking a profit, “I’ll think about it.” Always remember that when trading with a set of rules, you will never be 100 percent right. But if you do not follow a set of rules, you increase the odds of being 100 percent wrong in your trading. If you manage your trading risks and execute promptly on the trade signal, then you increase the odds that you will be successful. When trading, your mind can play tricks on you. You start to anticipate a buy signal only to act on a false signal. You need to learn when and how an actual signal is generated and what and when you should trigger the action to initiate a trade. When you are trading market signals by a predefined set of rules and a set of criteria, then the mind cannot play tricks on you. When a signal says buy, then buy; when a signal says sell, then sell. It’s that simple. Generally speaking, from my experience, if a trader says, “I am tired of this,” and decides not to take the signal, that ignored signal is the one that becomes a big winner. If you have traded before, you may relate to that syndrome. For day traders in stock or stock index futures, this usually happens in the last hour of the trading session!