What does someone down 50% on a position look at? The all-time high. They tell themselves, “If it gets back to my entry price,
I’ll get out.” But notice: this thought is pure attachment, with no logic behind it. The market doesn’t know your entry price;
it only responds to current supply and demand.
Once you decide to hold a losing position, you automatically seek out good news and filter out bad news. This is called confirmation bias. You start thinking,
“This time is different.” Those five words have burned more money throughout history than any hacker ever has.
The antidote is simple, but hard to put into practice: before opening a position, write down “Under what circumstances would the logic behind this trade
no longer hold?” Then act when the time comes, regardless of how you feel. By separating the decision from the act of holding, you can see things clearly.
What is the market saying, not what you want to hear.
What do you think? Share your experience in the comments.