Holding onto losing trades is indeed a hurdle that cannot be avoided in trading, but passively waiting is not as effective as actively breaking the deadlock. Here’s a more practical approach to help you minimize the damage from losing trades:
For slightly losing trades, don’t get tangled up; either decisively close the position during a rebound, or reduce half of your position at a high price to mitigate risk. For deeply losing trades, don’t stubbornly hold on; reduce your position gradually in 3-5 batches, keeping some capital for a chance to recover. Emotional averaging down will only add fuel to the fire.
Using technical levels for decision-making is more effective: If you’re losing at a high level and the trend has reversed, don’t hold on to false hopes, quickly cut your losses; if you’re stuck in a mid-range position, keep a close eye on key moving averages, and sell part of your position when it rebounds to resistance; if you’re stuck at a low point, don’t rush to cut your losses, wait until the support level stabilizes, and add a small position to lower your cost, selling together during a rebound.
The trend is the best guide: Losing trades in an upward trend are usually temporary, hold on and wait for profits; in a sideways market, watch the upper and lower boundaries of the range, and sell half when approaching the high point; in a downward trend, if you’re stuck, don’t wait, cutting losses is a matter of survival.
Ultimately, the root cause of losing trades often lies in not setting a stop-loss when opening a position, or holding a position too long and getting deeply stuck. Remember: no matter how accurate the analysis, it’s more practical to use light positions + stop-loss; no matter how good your mindset, it can’t withstand the torment of heavy positions. The core of actively managing losing trades is never to wait for the market to save you, but to first protect your risk threshold yourself.
