I once traded next to a guy who sarcastically said to one of the other guys on the floor, when asked how he was doing today, "yeah, great, I'm making hundreds of dollars..." They then both casually laughed in a kind of Thurston Howell III way, as if they were thinking, "might as well be wiping my ass with hundred dollar bills, who cares?" He was a really good trader, and routinely made $25K before the open most days during the volatility of the financial crisis, according to his own account. There was really no hubris in his response or tone; for him, making a few hundred dollars was truly a non-event. For me, it would have been like I'd won the lottery to make a few hundred dollars a day.
Why was this trader so matter-of-fact about making a few hundred dollars?
We all have a "comfort" (or "normal") number. In your bank or trading account, you have a number you are comfortable seeing. At the end of the trading day, you have a profit or loss number that is normal to you. On a per-trade basis, you have a number that feels about right. This trader had a very high number. A few hundred dollars was so far below his "normal" number, that it was truly inconsequential to him.
So, how do we increase that profit number, the number which feels normal to us? Well, regardless of your typical risk:reward ratio, what you extract from a market will be bound by your risk. If you normally are willing to risk X and normally make Y, then you cannot risk X and expect to make 5Y. This implies that the other number--the loss number--must increase along with the profit number. You will not consistently have $1000 days (making that your "normal" number) if you are not willing to see -$1000. While you will never enjoy losing, if losing $1000 freaks you out, then so will making $1000.
The message here is not that we should look to lose money. Neither is it to blindly put on bigger trades, or to blindly increase targets hoping to make more per trade. It's this: if you're having some measure of success and you're winning, then you also must be willing to risk (and hence, lose) more in order to grow that success. This may mean sizing up, or it may mean allowing winners to pay you more by sticking with the trade that is working. These are just components of good trading, not reckless behavior. Note that even when in a winning trade, you risk losing unrealized profit when you choose to hold longer. So the "risk free" trade is not risk free -- there's an ongoing decision about managing a position/trade, and so you are always risking a loss every moment, whether it's deposited capital or unrealized profit.
So, we cannot eliminate risk.Yet,many traders get caught in the trap of thinking that they can analyze their risk down to almost nothing. Why else do traders spend countless hours studying and analyzing charts, numbers, and other market-centric things aimed at helping them become better at reading the market? We all want that perfect trade -- we enter, take no heat, the market goes straight up without downticking, right to our target and fill us. Unfortunately, it doesn't work that way.
The only way to increase our comfort number is to increase our risk, and that means being able to accept loss. As one great trader on this forum said: "the essential job of traders then is to reduce uncertainty, not risk." Put the risk on, be smart about it, and that number will grow.