What is a person with a 50% unrealized loss looking at? They’re looking at the “highest price in history.” In their mind they’re saying: back to my cost basis,
then I’m out. Note: in this way of thinking, it’s all obsession—no logic. The market doesn’t know your entry price,
it only responds to today’s supply and demand.
After you take on the position, you automatically collect positives, block negatives—this is called confirmation bias. You will feel
“This time is different.” These five words have burned more money in history than any hacker ever could.
The antidote is actually simple, but hard to do: write in advance before opening the trade exactly “under what conditions this trade’s logic
becomes invalid,” then execute at the right time without checking your mood. Only by separating decision-making from holding can you truly see
What the chart is saying—not what you want to hear.
What do you think? Share your experiences in the comments.