It’s simple. You know what you need to do, but you aren’t doing it. There’s a disconnect between what you know you should do and why you think you should do it. You haven’t answered the why so therefore you won’t do it.
The problem is that your analysis is pretty good and generally you’re correct on your trades. The ones which don’t work out and you cut are easily forgotten and the confirmation bias is to remember only the ones that worked out. The small losses were simply trade errors and not losses. Your analysis only missed a key piece of information and that’s why it didn’t work out, not because your crystal ball isn’t a crystal ball and the market is a probability engine.
When you start to take that loss you look for reasons why it will work out. You move the stop because you’ve seen some info for why you think it will turn. Many times this probably works out and you take your 2/3% profit but the risk on the trade was closer to 10%. Not a good risk reward ratio, you’re cheating yourself because you believe your risk is as low as the stop loss, but actually it’s not even 10%. It’s 100%, or rather your max pain point, 20%. Possibly once you get beyond 20% loss you’ll increase the pain tolerance to 60% or more. This too will still work in your favour from time to time. You’re being trained in bad habits. It only has to wipe you out once, it doesn’t matter how many times this situation works in your favour.
The why of it is that you are not a rational creature all of the time. There are cases where you’re not rational, automatic stop losses protect you from the irrational self. You need to learn about this and accept that you’re not actually always the one in charge. Confirmation bias is going to hide from you all information that says your current trade is a loser and it will focus on the retracements rather than trend itself. How can you combat that? Practice can get you there through a lot of pain but then you’re learning bad habits and those are very tough to break. Far better to learn the good habit and take the hit before you get into a really tough situation where you’re not sure what to do. Stay in the center, away from the emotional extremes.
The cost of emotional extremes is that it takes you longer to return to normal.
When you hold a losing trade, you lose the potential to make profits. And you surrender money that will take you twice as long to get back. (unless you increase size to avoid the time cost, then you’re done)
Cut the trade for mental space and capital preservation. You never want to lose control of a trade.
When you’re clear headed you are able to look for more opportunities and exercise your edge.
No edge can hold up with large losses. Therefore no matter how good your analysis may be, it cannot make up for large losses.