Charlie Munger: I believe that great investors are, for some, like great chess players; they are almost born investors. You must know a lot, and you also need the right character, the trait of delayed gratification, and you must be willing to wait.
There’s also a strange point that good investing requires a peculiar combination of patience and ambition, and very few people possess this combination. You also need a sufficient amount of self-awareness; you must know what you have mastered and what you have not, and you must know where the limits of your abilities lie. Many smart people do not know the limits of their own capabilities; they imagine themselves to be smarter than they actually are, and of course, this way of thinking is very dangerous and can lead to trouble!
If we were to say what is most important in trading?
Now it is clear that it is controlling drawdowns.
That is the best answer, and there is no second.
Controlling drawdowns is so important.
Stop-loss risk control must be decisive; you must act swiftly and without hesitation.
Trading is so difficult, and when the market moves, you can make a lot with just a handful of trades.
But in reality, very few realize their profits and cash out.
If we compare the market to a battlefield, then risk control is the key to life and death after you enter the battlefield. Knowing when to defend is something that many people do not understand; they go in confused and still attempt to charge and fight, trying to capture cities and territories, which can easily lead to their demise.