There’s a saying in the trading world: Cut your losses short and let your profits run.
The expression is used to encourage traders not to waste their time in losing positions, but still have the patience to not sell profitable winning trades too quickly.
We hear this saying all the time, especially from traders that are just starting out and are trying to educate themselves on different trading strategies.
And it’s a great way to generate success… if you’re able to actually do it.
You see, the problem with this mantra is that traders tend to get the opposite effect.
You see, it’s human nature to have the desire to win. But even with the best intentions, it can be hard for new traders to accept a loss when it happens.
The desire to win and not lose can quickly result in a new trader overleveraging their account and not having any amount of staying power.