Many traders do not only pre-define offensive plans but they ignore defensive plans when an initial position is taken. As they are what makes or breaks your trades. Not having a defensive trading plan is a lack of money management techniques. Without a proper Money Management plan it is difficult to cut losers and let winning trades run. Many traders also overstay when the market goes against them, they are not flexible enough to change their minds or opinions when the trend is clearly against their positions Instead of limiting their losses, traders tend to add to losing positions.
Many people trade with their hearts instead of their heads.
That s why they should have a plan first, and stick to it. Especially after a winning streak when traders are feeling confident that they can beat their systems. The result is emotional trading Which also leads to losses. Traders often try to carry too big a position relative to their available capital, and trade too frequently for the size of the account. Too many traders are underfinanced, and get washed out during a normal market movement against them.