The trading of most novice traders is governed by hopes and fears. When there is a losing trade, instead of throwing it out they hope it will come back, and even hope that the loss will eventually turn into a profit. Another mistake made by novices is that when they have a profitable transaction, because they are worried that the profit will be reduced or the loss will be reduced, they choose to settle down and miss a big market. Once trading is controlled by hope and fear, a trader is on the path to ruin: big losses and small profits.
Unlike novices, professional traders are afraid of losing more and more, so when they lose money, they sell quickly. They only accept a maximum loss of about 1% to 2% of the account funds at any one time. Professional traders can think clearly and wisely know the risks they are taking, and when the stop loss is hit, they get out of the trade. This keeps their overall losses small.
When there is a winning trade, professional traders use a trailing stop in the hope of making as much profit as possible, and they don't exit a winning trade prematurely until a key price point tells them the trend is starting to reverse.
Profitable traders fear that losses will get bigger and bigger, and hope that profitable transactions will continue. This mentality allows them to stay on the side of the trend and avoid any major losses. This is why most of the best traders in the world follow trends and are consistently profitable. Would you like to join their ranks? So don't let hopes and fears rule your trades, but you harness them.
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