Loss position on : sitting and waiting?
Overwinding losses is a hot topic, and it is relevant not only for beginners, but also for traders with trading experience. One caveat - this article does not apply to long-term investors with a large capital, because in most cases they are very competent people, who observe the risks and bet on the future. There can be losses on their positions, but this is part of their trading style. We will focus on ordinary traders.
The habit of trading wrong
What do you mean by loss siting? Loss siting is when Trader does not close a position that is making a loss and holds it in the hope that it will one day become profitable. There is nothing particularly unusual about this, however There are a lot of dangers in this way of trading.
The most important is attaching the wrong kind of trade when opening a trade, the trader does not know what kind of loss he can incur. And improper trade is contagious.
Suppose the trader has already faced such a situation once, was able to sit out the loss and closed the deal in the black. As a result, deep in his subconsciousness, he remembers this moment, and every time he encounters a similar situation, he does the same thing.
What is the danger?
The danger is that because of this approach someday he will lose his money completely. It's only a matter of time. Let's look at an example.
The trader has opened a position, but made a mistake in the direction and is making a loss. He does not close the position and waits. He remembers that simply sitting out a loss has helped him in the past. The trader waits. The minus increases every day, the loss on the position keeps growing and growing. The trader keeps dreaming that the price reversal in the right direction is just around the corner.
However, there is still no reversal and no reversal. Thanks to this approach of loss accumulation, more than half of the Depositsif not more. This is the key point! The trader will not close the position anymore, because he has already lost most of the deposit, so in 98% cases such "lucky" people keep on waiting. The result is clear, the trader waited until there was no money left in his account at all. This is what over-sitting has led to!
Losses are the cost of the profession
It's worth noting that sitting too long may save you once, twice, or even ten times, but the wrong trade is stuck and will stay stuck. And it will make itself known when it's too late for you and your money!
So always think when you're doing something, especially on e. Don't you remember the golden rule? When a trader has opened a trade, he knows how much loss he can incur and how much profit he can expect to make. It is impossible to always make only profitable deals.
Losses are the cost of the trader's profession and they will be, whether you want them or not. Moreover, it is losses that a trader can control. And the success of the whole trade will fully depend on this competent control!