What psychological factors contribute to losers’ reluctance to set stop-loss orders, even when it’s recommended?
Fear -
- fear that their broker will push their prices to the stop to force the position to close
- fear that admitting something is a possibility will make it come true
- fear of being forced to accept a loss (can arise from the mistaken bvelief that a loss is a failure or mistake by the trader
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what they said!
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Overconfidence in market predictions often makes traders hesitant to set stop-loss orders, even when it’s strongly advised.
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Humans are devolved to avoid pain at all costs. And for trading it’s to avoid the pain of losing.
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I think the most common psychological factors that lead traders to neglect setting stop-loss orders is overconfidence that the market will move in their favor. Thiss can blind traders to the potential risks.
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Exactly, right. Overconfidence can sometimes blind us to potential risks. Setting stop-loss orders doesn’t mean doubting your abilities; it means being responsible and prepared for any market scenario. It’s a sign of prudent trading."
The fear of losing is a powerful motivator, and it’s important to acknowledge it in trading.