But even those that do have rules for exiting, only a small minority will stick to them, and this is because we as traders can not get past thinking about the money. Money rules us as traders and probably rules us in our lives too.

If you go back over all the points above I can tell you that all of them contribute in some way to the most difficult thing a trader will do; hold on to winning trades.

For example, if you think you’re a successful trader then why would you cut your profits short?

Because if you thought you were a success you would know yourself and where you need emotional management, you would learn any jargon and how to analyze, you would have a goal, and you would have a plan to go with it, which means you would have a system with rules for analyzing, entering and exiting, and you would have a fair idea how this system performs, which means you would have back-tested or paper traded it, and you’d cut losses short and you’d log all trades, you’d remain independent, and finally you’d stick to all the rules.

What a trader will face is the situation where they cut a profit short and take a look at what they made for that trade; this will send out a good feeling throughout their body. What will compound this feeling is if they look a little later on to see their decision was justified because the trade would have resulted in a loss if they’d not closed it out earlier.

The problem is this good feeling we are experiencing is encouraging bad behaviour whether it’s breaking rules, trading without a plan or whatever. To continue on this path will lead you to having to find more winning trades because the trades you do get wrong will cost you more than what you make from the profitable ones.

Now here comes the litmus test: If you cut a profit short only to see it would have been a lot more profitable had you held on longer or used your exit rules then this should hurt – I mean really hurt, but not because of the lost opportunity but because you see it as a failure on your part. If it doesn’t then success means very little to you.

All traders will go through the process of seeing themselves in a winning trade only to see it end up as a loss. This is inevitable. Apart from having someone look over your shoulder to prevent you breaking rules or cutting profits short, the only person who can do this is you! If you find yourself cutting profits short then look for your weakest links in your trading business. I have given you many here to ponder.

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