Instead of riding profits, we traders are more inclined in riding our losses. The question is why? We knew the later is not the right thing to do, but then we do tend to do it more frequently.
Do not blame yourself on this as this is one of the most prevalent problems for traders, including me. I can summarize the issues on these as follows:
1. Whether you agree or not, the market itself is emotional. It is everlasting and will always be.
2. Though you are part of the market, you have the power to control yourself, not the market. So, why should you become emotional too?
3. Hence, in order to take out the emotional factor, some traders advice me to use robots or Expert Advisor. I told them I had among the best EA that I purchased (not FREE) and so far, almost all of these EAs giving me bad experience.
4. So, another solution is to have a mechanical system that I should follow manually based on signals. I'm using 2 main systems at the moment and it work pretty well, though not 100%.
5. But still, when manual control is in place, we as humans do have the tendency to be un-disciplined and try to outsmart the system by taking earlier decision than we're supposed to.
6. This is the problem with manual trading. You need to have patience & discipline in following the system.
7. But then, the market is so dynamic. Though they are patterns for us to see like Fibonacci and Elliot Wave theory, still we can never be 100% sure. This is where risk management plays its important roles.
8. Since we knew the probability is always 50/50 (either up or down) we do have the tendency to act on our own judgement instead of following the system.
9. And these are the times when we make mistakes.
10. At this point, then only we would realize the importance of following a good trading system, especially the one that we had back-tested and proven record.
12. The reason we don't ride our profit is because we don't want to be greedy and we are too afraid that a winning trade turn to a lose one. Normally you or anyone would have this experience at least a few times.
13. The reason we ride our losses is because we HOPE that it won't go that far against us and will eventually return to our entry point or even beyond for profits.
14. As long as you have a sticky STOP LOSS, I believe it is ok to let the market swing against you as long as you knew what is going on.
15. If you don't have a STOP LOSS, then don't blame the market if they burn down your account. It is ultimately your fault.
16. All these are especially true for new traders.
17. Seasoned traders are more experience, systematic and discipline in their approach, hence giving them a better edge in retaining their profits and make an easy come-back after a series of drawdowns.
My conclusion is - It's your money so do whatever best to grow and protect it from the market force. DO NOT mess around with the market and always go with the trend. Be a GHOST RIDER on the profitable side of the market.
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