Perception of loss
Quite a few books and articles have been written about, how to make money in the markets. Some of them are even written by people., who made money themselves as traders! but, you do not often see books or articles dedicated to this, how to properly lose money when trading. “Cut your losses and let your profits grow” is the most common advice. How to define, when the position becomes losing? Interesting, but most traders, whom I knew, could not clearly formulate the answer to this question, when you opened your positions. They focused on entering, but then, did not have a clear idea of the exit especially, if this exit was in the "red zone". I am convinced, that one of the real problems is the difficulty of traders to separate the reality of a loss in a particular trade from the psychological perception of oneself as a loser. At a certain level of their development, many traders equate trading losses with personal failure. It upsets and depresses them, making them uneasy. Eventually, it affects their future decisions, because their gains and losses become arguments against their self-worth. As soon as a trader starts to focus on himself, instead of concentrating on the market, distortions in trading decisions become inevitable.