How can I resist adding to a losing position?
This time I traded $HYPE . At first I only opened 50 units, but then I kept adding as the position went into the red, and in the end I somehow ended up with 2,500 units.
Looking back now, it was really kind of crazy.
It’s not like I didn’t know adding to a losing position was a problem. Most of the time, I knew very well that if the trade went wrong, I should admit it and stop out. But when that moment actually came, I still kept thinking it might come back a little, so I’d wait a bit longer.
The most ironic part is that it often really does come back a little.
But I have a very bad habit: when I’m in the red, I keep adding, and then when the market finally gives me some breathing room, I rush to cut the position, or even run early. On the surface it looks like I’m trying to recover losses, but in reality I’m just piling up more and more risk, and in the end I don’t dare hold on to the kind of move I actually wanted.
This pattern has happened over and over before. Every time after a big loss, when I was finally close to getting back to even, I thought I was finally recovering. Then before long, another, even bigger drawdown would hit.
This time I was down 3000. Later on, although some of it came back, I know the real problem wasn’t whether I made or lost money on this one trade. It was that the same mistake kept repeating.
Sometimes I really don’t know what to do to make money consistently.
If you read the market wrong, you can admit it. If you read the direction right, you still may not make money. The hardest part is controlling the urge to add when you’re underwater, and not always thinking you can make back previous losses with the next trade.
The thing to fear most in trading may not be losses themselves, but the fact that after every loss you feel like you learned something, and then the next time the same situation comes up, you still make the same choice.
I want to ask everyone: how do you overcome the bad habit of adding to a losing position? Especially when you know you shouldn’t add, but still feel like adding a little more will let you get back to breakeven—how do you resist that?
This time I traded $HYPE . At first I only opened 50 units, but then I kept adding as the position went into the red, and in the end I somehow ended up with 2,500 units.
Looking back now, it was really kind of crazy.
It’s not like I didn’t know adding to a losing position was a problem. Most of the time, I knew very well that if the trade went wrong, I should admit it and stop out. But when that moment actually came, I still kept thinking it might come back a little, so I’d wait a bit longer.
The most ironic part is that it often really does come back a little.
But I have a very bad habit: when I’m in the red, I keep adding, and then when the market finally gives me some breathing room, I rush to cut the position, or even run early. On the surface it looks like I’m trying to recover losses, but in reality I’m just piling up more and more risk, and in the end I don’t dare hold on to the kind of move I actually wanted.
This pattern has happened over and over before. Every time after a big loss, when I was finally close to getting back to even, I thought I was finally recovering. Then before long, another, even bigger drawdown would hit.
This time I was down 3000. Later on, although some of it came back, I know the real problem wasn’t whether I made or lost money on this one trade. It was that the same mistake kept repeating.
Sometimes I really don’t know what to do to make money consistently.
If you read the market wrong, you can admit it. If you read the direction right, you still may not make money. The hardest part is controlling the urge to add when you’re underwater, and not always thinking you can make back previous losses with the next trade.
The thing to fear most in trading may not be losses themselves, but the fact that after every loss you feel like you learned something, and then the next time the same situation comes up, you still make the same choice.
I want to ask everyone: how do you overcome the bad habit of adding to a losing position? Especially when you know you shouldn’t add, but still feel like adding a little more will let you get back to breakeven—how do you resist that?
