I am still a rank amatuer compared to all the world class traders on this site but this was one of the toughest things for me to overcome in my 5 losing years.
This thread title is actually the Third Major Axiom from the great little book by Max Gunther published in 1985 "THE ZURICH AXIOMS -- INVESTMENT SECRETS OF THE SWISS BANKERS"
Why is it so hard to give up on a position even when you see your profits evaporating or your losses mounting?
The Swiss bankers who arguably have been the world's best speculators for 300 years say there are 3 obstacles that cause us to freeze in our tracks.
1. The fear of regret is number one. We fear that the losing trade will turn into a winner after we have gone away. We have all seen this happen and it hurts.
2. This second obstacle is that we have to abandon part of our investment when we exit. We worked hard for that money and to just exit and abandon it, hurts. If we stay there is a chance we can get it back.
3. This third obstacle is difficulty in admitting we were wrong. We all take pride in our trading and want to be right. Being wrong hurts.
I knew all this and I still could not pull the trigger to exit soon enough. The market had me screaming uncle before I would close my position. My average loss in my early years was probably twice what it should have been because it was so hard for me to jump off the sinking ship. :eek:
This thread title is actually the Third Major Axiom from the great little book by Max Gunther published in 1985 "THE ZURICH AXIOMS -- INVESTMENT SECRETS OF THE SWISS BANKERS"
Why is it so hard to give up on a position even when you see your profits evaporating or your losses mounting?
The Swiss bankers who arguably have been the world's best speculators for 300 years say there are 3 obstacles that cause us to freeze in our tracks.
1. The fear of regret is number one. We fear that the losing trade will turn into a winner after we have gone away. We have all seen this happen and it hurts.
2. This second obstacle is that we have to abandon part of our investment when we exit. We worked hard for that money and to just exit and abandon it, hurts. If we stay there is a chance we can get it back.
3. This third obstacle is difficulty in admitting we were wrong. We all take pride in our trading and want to be right. Being wrong hurts.
I knew all this and I still could not pull the trigger to exit soon enough. The market had me screaming uncle before I would close my position. My average loss in my early years was probably twice what it should have been because it was so hard for me to jump off the sinking ship. :eek:
No one likes to lose money. That's not why we trade obviously. But we need to learn from experience, and hopefully most of us eventually do, about keeping losses small and knowing that not all trades will be profitable, and then moving on to the next setup that looks good. But it is hard to learn all this. 
