Baruch, I understand this problem. It is purely psychological.
I will illustrate why: Imagine your trade, entering at 0. You are at 0, break even, null. Now, imagine trade is on a scale from -10 to +10, 20 points, OK? Now, look at it from a P&L point of view. What happens when price drops, what do you experience?
Well, if you are the typical beginning trader, probably hope. You think it's fear, but it isn't. Fear is more like what it should be, although emotion is a no-no in trading altogether. So, what hope? Well, hope that the trade "may come back". You hope until the point of most pain, then you let go. At -10, your stop is hit and you're probably upset. You've taken your entire loss, and possibly more.
Now I will illustrate the opposite of that scale. You are in the profit zone this time. Price goes up, goes up more. What happens this time? What do you experience? Hope? No! Why?
Well, if you're the typical beginning trader, you will experience fear. Why? Well, you fear to lose your 'already gained' profits. After all, you had to hope so much during all your losers, and finally you've got a winner, so let's take it before it goes.
But does this make sense? No! Ideally, it should be the exact other way around! you should fear the losses, and hope when in the winners!
Most people don't. They hope with their losers and fear with their winners. This is the irony of it all, because your mind makes you do the exact opposite of what you should do! Do you see what I mean? This is the exact reason why 95% of traders fail.
So, the question is: What can you do about it? Well, you don't really want to twist your mind to believe the opposite here. The key is to not let emotion affect you at all. Is this possible? You may laugh, after all your heart racing every time you enter a trade. Well I tell you what: You're up against a lot of traders out there who push 1,000+ lots all day long, without a tad of emotion! If you are emotionally affected, you will be but a dead fish in the water against them, because they will squeeze you until you exit - every time! Don't be the squeezed one. Go with the squeezers, and squeeze, preferably with volume!
The scale analogy and fear vs hope, I just made all this up myself, but it's certainly very applicable, and you will find similar things in good psychology books.
Again, I recommend reading Douglas to get a grip on this. He explains how to deal with these typical trading issues. Once you've mastered the most important bits of it, there's a whole new world open to you.
Learn not to hope with your losers.
Learn not to fear with your winners.
This pretty much directly reflects POP's #1 & #2 trading rules...
By the way, there's another thing I like to do (which kind of relates to the scale described above) - Don't think in terms of "winners" or "losers". This has a bad effect on your psyche. Instead, think in terms of "favorable excursion" and "adverse excursion". That's what I do. It's very subtle, but it makes a great deal of difference in terms of objective trade evaluation. It's better for you to think about "adverse excursion" than about "losers".
Hope this helps,
Scientist
