Most people who lose money often fail because of this one bad habit: not selling when the price drops, fantasizing about a rebound.
I have seen too many accounts go from profit to huge losses, not because the market is bad, but because when the price drops, they are reluctant to stop-loss, always thinking 'I'll sell when it rebounds.'
At the beginning of the drop, they don't sell; when it rebounds a little, they feel the rise isn't enough; it drops again, and they say, 'There's no chance to sell'; it rebounds again, and they think, 'I'll wait a bit longer'; as a result, they go back and forth, slowly losing dozens of points, and all the money they made before is given back, even leading to a loss.
This is not a mature trading strategy. As long as you don't stop-loss, no matter how much you earned before, a single mistake can wipe everything out.
I have seriously studied all the long-term stable profit makers, and they have one thing in common: once they realize they were wrong, they immediately cut their positions, quickly admit their mistakes, and start over.
I do the same. Unless it is a value investment project that I am very confident about and willing to hold long-term, I dare to add more as it drops.
Otherwise, before placing every trade, I will set a stop-loss plan in advance, and never rely on luck.
Trading is something to do for a lifetime. If you want to survive long in the market, you must start now by changing the bad habit of 'waiting for a rebound to sell'. Before every order, ask yourself: what if I'm wrong? How will I stop-loss?
Plan ahead, execute rationally, this is what a mature trader should look like.
