Many a trader have blown accounts this way. It's definitely a strategy the 90% use.
If you're like me, I know you wont change the way you trade until you start taking huge hits and near blow your account, so here's what I suggest you do. Keep doing what you're doing, but keep track of when the trade goes against you and mark where you should cut your loss but don't. You'll either hold till it turns around or hold til you lose so much money you have no choice but to get out. Then add the differences.
Example:
ABC stock Buy in at $10 goes to $9 where you should sell, but comes back and hits $11
XYZ stock Buy in at $10 goes to $9 where you should sell, but you average out back at $10
BCD stock buy in at $10 goes to $12 and you sell and profit.
WXY stock buy in at $10 goes to $12 and you sell and profit.
SHTF stock, buy in $10 goes to $9 where you should sell, keeps going to down to $3 before you cut your loss.
So in this scenario, doing what you do, you end up making $5, but losing $7 so your account is down 20%.
If you had cut your losses, you make $4 and lose $3 So you're up 10%.
You'll also notice that the win rate is 80% with your strategy and only 40% with the cut loss strategy, only difference is the 40% win rate makes money.
So yeah...keep track of where you should cut and see how much you'd be up if you cut losses where you know you should instead of holding until they turn around.
