With cryptos going higher and higher, I was talking with a buddy who mentioned he lost $10k+ on a string of open positions in crypto back during the peak of 2017 right when the market crashed.
He had the chance to close his positions but didn’t, thinking price would rebound, but it never did. He ended up still profitable, but he lost more than he gained.
I’m trying to put myself in his shoes and just can’t understand why he held on for so long. Can anybody relate?
Yes, it’s a psychological reaction. Humans evolved to avoid pain at any cost, as it’s a precursor to loss of life.
A losing trade causes pain and traders avoid that by thinking they’re always right and hoping the trade would turn in their favour, and thus avoiding pain.
I counter that by hating losing, as we all do, but I hate losing big, more so. Cut and close. Use the savings to fund another trade.
We humans have a desire to gain more and more even after having enough already. That is why its a saying “keep emotions out when trading”
I dont hold my positions for too long… Its important to realize when to exit.
This thing happens while trading you always think of gaining and gaining more profit while trading but the market is unpredictable and at times you enter with making losses. So always know when to exit a position and keep your emotions in control.
When I first started trading back in 2008 I lost big in the market dump and learned many valuable lessons in trading! I’m still here going strong so I must be doing something right.
I lost £25,000 in one trade! My total loss for that year was over £65,000, it was truly a disaster year. Since that time I have worked and worked, now I am lucky in achieving 5 figure salaries on a yearly basis consistently for the last 8 years.
Made a big loss on a life sciences firm that was supposed to be releasing a new and wonderful product that was going to shake up the sector. I can’t even remember what it was, but my arrogance was such that every month when the release date had not yet been announced and the share price had fallen some more, I bought some more. A friend of mine was holding on the same news and I suppose that was part of it - we fed each other’s enthusiasm.
Many lessons in that one expensive experience.
Yes, you are right. Our mentality has been like that. Where I think I can always be right I can never be wrong and never try to learn from those mistakes.
I had one trade that was pivotal for me. I lost about 20% of my account at once. A few weeks ago, EUR/USD.
I stayed because I sooooo sure that it was gonna go up. It went down, and I bought more. Went down, bought more. I was foolish. I was gonna make so much money from this trade. I was ready.
And it never happened. I didn’t wanna let go of my golden ticket.
But it humbled me. I now understand “the market is always right”.
First rule of trading - Go with the trend. No point in going against.
It is easier to go with the trend and statistically speaking you have a higher chance of making money by going with the trend. Cheers
good to hear you pulled it around
after turning £1000 to over £25,000 in less than 2 months, lost £8000 in two days, through lack of experience. i was still selling the dax off last year when it was recovering
One of the first lessons every beginner should learn. Manage your risk! This is the most expensive lesson I’ve ever had and the one that still hurts me today. So much so I only risk 1% a trade now and never more.
I lost 5k on multiple positions long and I didnt close as it sold off. No, I added to my account to prevent a margin call!! I added another 5k! And went on to lose that too.
I couldnt understand why I did it at the time and what I’ll say is it felt so natural and felt the right thing to do. But I now understand it comes under trading psychology and not being able to take a loss or accept your wrong. Secondly, having a bias that’s so strong you think you should be right. You hear people say never marry a position.
Reading trading psychology books is an important part of trading and not something that should be skipped.
yes i gone through many up and downs over the last year or two,convincing myself not using stops and just zoning in on the markets. Im convinced its the big losers what makes all the difference i will never trade now without a stop loss
I often do this now. Once I can move my SL to BE, I add another 1%.
In a channel trade, I think I could still go up to 2% at once. But that’s my max.
yes adding increment s and moving stops is the ideal method “when” you find a trend .A lot of pairs ranging around support resistance
Very true. In a range, I wouldn’t move my SL at all because anything can happen. But in a channel, Once, it’s safe, I can move my SL to BE.
These days, I try to trade only in accord with the direction of the channel. If it’s an upward channel, I will try to avoid shorting it. But I’ll do 1% risk bullish. If it’s downward, I’ll wait for it to hit resistance, then I’ll short it and place an OCO.
This is it, right here - acceptance you are wrong. Is this a guy thing perhaps? Would be an interesting discussion if the other side is wired differently.
Perhaps. But the end result may be the same lol. I’m not a dude and while I don’t have a problem accepting I’m wrong, I do have a problem accepting that I may be losing money lol. So I end up doing one of the worst things a trader can do: HOPING I’m not wrong. 
2% forex as I always use that as max risk
Per trade or per account? What if you haave like 3 or 4 trades open?