If you have ever traded, you have surely experienced these two feelings:
FEAR when the order is profitable – HOPE when the order is losing. And these two mentalities keep traders forever trapped in a vicious cycle: CUTTING PROFITS - HOLDING LOSSES - BURNING ACCOUNTS
Because when the account is in the green, instead of letting the order continue in its trend, traders start to FEAR: "What if the price reverses? What if the price goes back to entry? Better to close it for certainty", and so they CUT PROFITS, this mentality and behavior makes traders very poor at HOLDING PROFITS.
When the account is in the red, instead of cutting losses according to the trading method, traders start to HOPE that: "Just a little longer, it will bounce back and I will exit", many times the market miraculously brings traders back to shore, but gradually they form a very good habit of HOLDING LOSSES, this "bad habit" will lead their accounts to ruin one day.
So traders need to rethink and reverse these two mentalities.
For profitable orders, instead of being AFRAID, traders should have the HOPE that the price is moving according to their method, so why be afraid? If the market still supports, then continue to HOLD PROFITS.
For losing orders, instead of HOPE, traders should switch to a mindset of FEAR, FEAR that if they do not cut this order, their account will be eroded to depletion by the market, potentially burning the account, just cut it – cutting losses, they will wait for another opportunity to trade.
REMEMBER:
The bookmaker is VERY GOOD at HOLDING PROFITS (that is when traders hold losses)
The bookmaker is VERY POOR at HOLDING PROFITS (that is when traders hold profits)
So in the overall game, traders should see who survives, themselves or the market, 95% of traders out there are VERY GOOD at HOLDING LOSSES and VERY POOR at HOLDING PROFITS => Therefore, if traders want to be in the top 5%, they must reverse the mentality to be VERY POOR at HOLDING LOSSES and VERY GOOD at HOLDING PROFITS.
#tradingtips
