Conflicting emotions

We always see opportunities to exit a trade before the target.

We see that we’re ‘in the money’ and worry that a reversal will take our profit away.

So, we exit early, grab what we can and then justify that to ourselves.

On the other hand, if we are out of the money, we more often than not hold until our stop is hit (to exit early is an acceptance of any loss against us and we are in the hope that a reversal of price will minimise that loss).

That is our nature but makes for a poor strategy.

We need to reverse this tendency and help to balance the equation.

We need to discipline ourselves to (1) hold until target and (2) exit a losing trade before the stop if probability reverses.

Sounds easy, but probably one of the hardest things for a day trader to do.

Published by Day Trader

I flew fast jets for 30 years of my life. I've traded full-time, more or less, for the last ten years, initially from fundamentals and over the last few years as a dedicated day trader. I live on the North Norfolk coast.

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