Why do positions you’re least willing to cut losses from often end up losing more in the end?
When I first entered the market, I always thought selling meant admitting defeat.
A 10% drop made me wait for a rebound; a 30% drop made me start researching fundamentals; a 50% drop made me tell myself, “Just hold long term.”
Only later did I realize that a lot of so-called “beliefs” are simply unwillingness to admit that my judgment was wrong.
Human nature treats the purchase price as an anchor: anything above your cost is “gains,” anything below it is “undervaluation.” But the market doesn’t know where you bought, and it certainly won’t pull prices back just because you’re eager to get back to break-even.
The deepest pit I fell into wasn’t misjudging one project—it was trying to prove I wasn’t wrong. I kept averaging down, my position kept growing heavier, my options kept shrinking. And when a real opportunity finally appeared, all my capital was trapped in that story of “wait a bit more and it will come back.”
Cutting losses doesn’t mean you sell everything the moment it drops.
Before buying, write down the logic clearly: why you’re buying, and what conditions indicate your judgment has become invalid. Price fluctuations can be tolerated; when the logic breaks, you should leave.
The most expensive cost in trading is never a single small loss. It’s tying up time, capital, and emotions—maintaining over the long term a decision that has already become wrong.
Remember: admitting you made a mistake costs you one chunk of money; refusing to admit it may mean missing an entire cycle.
When I first entered the market, I always thought selling meant admitting defeat.
A 10% drop made me wait for a rebound; a 30% drop made me start researching fundamentals; a 50% drop made me tell myself, “Just hold long term.”
Only later did I realize that a lot of so-called “beliefs” are simply unwillingness to admit that my judgment was wrong.
Human nature treats the purchase price as an anchor: anything above your cost is “gains,” anything below it is “undervaluation.” But the market doesn’t know where you bought, and it certainly won’t pull prices back just because you’re eager to get back to break-even.
The deepest pit I fell into wasn’t misjudging one project—it was trying to prove I wasn’t wrong. I kept averaging down, my position kept growing heavier, my options kept shrinking. And when a real opportunity finally appeared, all my capital was trapped in that story of “wait a bit more and it will come back.”
Cutting losses doesn’t mean you sell everything the moment it drops.
Before buying, write down the logic clearly: why you’re buying, and what conditions indicate your judgment has become invalid. Price fluctuations can be tolerated; when the logic breaks, you should leave.
The most expensive cost in trading is never a single small loss. It’s tying up time, capital, and emotions—maintaining over the long term a decision that has already become wrong.
Remember: admitting you made a mistake costs you one chunk of money; refusing to admit it may mean missing an entire cycle.