Trading Psychology : Why Your Losses Are Building Up?

Most of the traders in the market are facing the same problem, losses keep building up bigger and bigger and result in huge losses, the profit you made is not enough to cover.

In this blog, we will be sharing with you an human psychology to let you understand more about yourself and hopefully you are able to realized this and do some changes in your trading behavior.

Lets answer the questions below :

1st Question :

A. You will lose RM 900 immediately

B. You will have the chance 90% of losing RM 1000.

 

2nd Question :

A. You will earn RM 900 immediately

B. You will have 90% of earning RM 1000

 

With just a simple questions asked above we can clearly see that many traders in the market will rather take the chance of 10% to gamble on the not losing any money given the case that they are in a losing trade. But when it comes to a profit trade, they are not willing to take the 10% chance to for an extra RM 100.

You might think this is rational. But if you put it in trading like the actual scenario in the market :

 

“Abu bought 2 stocks, stock A & stock B. After 3 months, stock A profit at RM 100 but stock B losing RM 500.

At this moment, Abu wants to sell a stock for his wedding, he choose stock A to sell, because is in the profit and think that better take profit first, don’t want to be too greedy. Leaving stock B at the loss, where he hope that the price will bounce back up higher to have lesser losses or it will be better with a breakeven.”

 

Can you see what is the problem here?

Most of the traders and investors in the market are satisfied with a small profit but implement hope in their losing trade.  

Based on the questions above, we have asked our followers in our weekly KLSE Market POV session ( is a public session, you may register at the link at the end of this blog.) The result match our expectation :

 

Question 1 :

A. You will lose RM 900 immediately

25% of the participant in this questions choose A.

B. You will have the chance 90% of losing RM 1000.

75% of the participants in this questions choose B

Question 2 :

A. You will earn RM 900 immediately

75% of the participant in this questions choose A.

B. You will have 90% of earning RM 1000

25% of the participants in this questions choose B

 

Now you know why most of the time you are riding on losses but not profit, why the profit that you are satisfied with is not able to cover your losses, why you are always finding a high probability strategy but you still can’t make it.

The answer is because of our human minds will tends to choose a better action which makes us feel better with and choose the path with the hope of having lesser losses.

Now you have understand your decision making well. The next question you will ask is, what if I cut loss but the price bounce back up? I will have loss the opportunity.

We are not saying that holding on losses is not good, IF you know that they will push the price up higher. Blindly holding on losses is not good.

The solution to avoid the above is to understand better about the market, the price movement, the big boys intention. With the understanding of the big boys, you will know whether a retrace is just temporary or it will plunge.

If you want to know more about the big boys, you can read some of our blogs or follow us closely to have some basic understanding on how to follow the big boys in the market, so that every trades you make in the future, you know what you are doing with the facts of big boys not pushing up, so you can cut loss immediately and let the profit run until the big boys shows you that they have no intention to push higher anymore.


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Register for our weekly online KLSE Weekly Market POV : 

https://attendee.gotowebinar.com/register/4562907669705827074

Time : 8:30PM – 9:15PM, Every Monday

Ask our speaker will comment about your stocks performance in short term and Malaysia stock market movement!

Click here to learn our Follow Operator Trading Method.

DISCLAIMER : All stocks share here are based on the speaker’s point of view. It does not constitute an offer to buy or sell stocks.Viewers are responsible on their own trading decisions. All stocks share here are based on short term outlook of the stocks, it is not suitable to based on above stocks list for long term reference.


 

We outperform the market again on May & June!!KLSE WEEKLY MARKET POV 0272018

May 2018 RnS trading performance

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