Our trading psychology is often confronted with the strong urge to book small profits on a winning trade. If we listen carefully, we often hear our mind telling us:
I must get out now. I’ll have a small profit. It’s better than a loss …
How often have you said this or something similar before cutting a good trade short?
Cutting winning trades short is one of the most common problems traders have. It affects novice traders as well as more experienced trades. Cutting a winning trade short is a manifestation of loss aversion. The strong desire to avoid losses negatively affects trader behavior and pretty much everyone at one time or another is affected.
I just published a succinct article on cutting winning trades short and the antidote to overcoming this detrimental behavior. The article is in the Fall 2014 TradersPlanet Digital Journal now available on line. Here is a link to the article:
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