#Gate广场五月交易分享

The worst habit in trading: making a little profit and running, taking a little loss and holding on

If you also often do this:

Make a little profit and want to run,

But when you lose a little, you always want to wait and see—

Then what you have is not a small flaw,

But the most typical and damaging trap for your account in trading.

It has a name, called the disposition effect:

Not holding onto profitable trades, unwilling to cut losses on losing trades.

Behind this behavior, often, is loss aversion—

People tend to feel the pain of losses more strongly than the pleasure of equivalent gains.

Why is this?

Because when you are profitable, you fear profit reversal;

When you are losing,

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 profitable trades yourself

* You nurture your losing trades yourself

* Over time, make small money, lose big money

How to avoid this trap 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 is not to admit fault,

But to keep 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 profitable trades, rely on rules

You can use trailing stops,

Let profits run themselves,

Instead of panicking and running away.

3. Forget the cost basis, look at the market anew

Ask yourself:

If I am currently out of the market, 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 size is too large.

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 losses when losing.

But those who can truly stabilize,

In the end, are competing for one thing:

Let the rules make decisions for you.