The worst habit in trading: taking profits and running, holding on to losses

If you often do this too:
Take profits and want to run,
Hold on to losses and always want to wait a bit longer—
Then what you have is not a small flaw,
But the most typical and damaging pitfall for your account in trading.

It has a name, called the disposition effect:
Not holding onto winning trades, unwilling to cut losses.

Behind this behavior, it’s often loss aversion at work—
People tend to feel the pain of losses more strongly than the pleasure of equivalent gains.

Why is this happening?
Because when you’re making a profit, you’re afraid of giving it back;
When you’re at a loss,
You always think, “As long as I don’t sell, I haven’t really lost.”
Plus, you keep an eye on your cost basis,
In the end, you’re not watching the market,
But your own emotions.

The result is:
* You kill your winning trades yourself
* You let your losing trades grow bigger by hand
* Over time, make small profits and big losses

How to avoid these pitfalls in trading?
1. Write your stop-loss before entering the trade
Don’t wait until you lose money to think about what to do.
The purpose of a stop-loss isn’t to admit fault,
It’s to keep your losses within a range where you can still survive.
Pre-set stop-losses can reduce fear, greed, and hope interfering with your decisions during trading.

2. Don’t rely on feelings to close profits, use rules instead
You can use trailing stops,
Let the profits run themselves,
Instead of panicking and selling.

3. Forget the cost basis, look at the market anew
Ask yourself:
If I’m currently flat, would I buy here?
If the answer is no,
Then you should seriously consider exiting.
Because the market won’t give you a break just because your cost is at a certain level.

4. Reduce your position size to a level where you can stay calm
Many people can’t hold onto profits, not because of technical issues,
But because their position is too heavy.
A heavy position, a few points of fluctuation, can drive you crazy.
With a lighter position, you can follow the rules,
Instead of acting on your heartbeat.

The hardest thing to change in trading is often not the method,
But this instinct:
Fear of losing when making a profit,
Fear of admitting defeat when at a loss.

But those who can truly stabilize,
In the end, are betting on one thing:
Let the rules make decisions for you.
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