Trading financial markets can be both exhilarating and daunting. The potential for significant profits is often what draws people in, but the reality is that trading is inherently risky. Without proper risk management, even the most skilled traders can find themselves wiped out. Risk management is not just a tool; it’s a survival mechanism. Beyond capital preservation, risk management is crucial for maintaining mental clarity. Large drawdowns have a psychological impact that often leads to poor decision-making, revenge trading, and emotional trading mistakes. The larger the drawdown, the harder it is to recover. This is due to the exponential nature of percentage gains required to break even after a loss. For example: A 10% loss requires 11.1% gain to get back to the initial capital A 30% loss requires 43% gain to get back to the initial capital A 50% loss requires 100% gain to get back to the initial capital This exponential relationship means that the deeper the drawdown, the harder it becomes to recover. Therefore, preserving capital is not just about avoiding losses; it’s about ensuring that you can continue trading effectively without being forced to take excessive risks to recover from significant drawdowns.

It is an unwritten rule that as soon as an investment asset crosses an important psychological level, investors in the markets start speculating about when the next level will be hit. Such speculation cannot always be taken entirely seriously, but on the other hand it is not unreasonable to follow it.

In this article, we will take a look at some of the most famous Forex traders in history. These are traders who have made incredible gains in their trading careers.