DislikedBecause you think your going to be rich at the end of the trade. Then some news story come out and wipe out your account.Ignored
The KEY to stop losing is to preserve your account balance or at least the bulk of your acccount at all costs. I have recovered from less then 50% but it's incredibly difficult!
It's most definitely a mental thing - one desperately wants the trade to be a winner. When it starts going against, the urge or temptation is thinking that "well it has to come back in my direction sooner or later" so as a first option - you add to the trade or you'll maybe chose the second option - you move your mental or physical stop loss further away (I'm not going into hedging - that's a whole different and difficult ballgame) What happens? More often then not a Big loss !
Actually it's not the first or second option that's really the problem. It's the thought that "well it has to come back in my direction sooner or later" that's wrong! One HAS to be willing to take a fair amount of small losses and aim for a few BIG gains rather then a fair amount of BIG losses and very few if any big gains which is what the 99% are experiencing!
In practice it means being RUTHLESS. Not with the market, not with other players but with YOURSELF! Be very harsh on trades that are in the red, cut them as soon as your pre-determined SL is reached. That might be as little as 3 - 5 pips. I just don't agree with the advice to give a trade "room to breath". That could easily mean a 50 pip or more SL which most day-traders are not willing or able to stomach. On the other hand LOVE trades that are in the green which means leaving them alone as LONG as possible!
Lastly, once you've funded your account, you HAVE to decide if you are going to gamble, speculate or invest. Make that decision BEFORE you start! Obviously the last option is probably the only one that the 99% should select. Why? because it means you are NOT going to leverage your positions!! It might only mean .001 lots per trade and you might only be gaining 1% a day but that's 52% a year - what bank is gonna give you 52% interest on your money??