"Always cut your losses quickly", "Never let a trade go in running", and "Never add to a losing position" are just some of the pearls of wisdom we regularly hear cast in the direction of traders. But strangely, it was the very day I started consistently doing the exact opposite of these things (in a logical, controlled manner) that I started to turn from consistent loser into consistent winner.
I reckon that the majority of traders put too much money on the line in individual trades; that's why you so often hear phrases like "It was squeaky bum time", "I sat frozen in horror as the price suddenly collapsed", or "I nearly had a heart attack as the API crashed". Either that or their expectations are simply not aligned with reality.
Good traders should generally, but not always, be looking to go against the crowd; the key for me was to stop thinking "I've got some money to trade; what shall I do with it?" and start thinking "What types of things tend to happen in this market, how can I embrace them without following the crowd, and how should I sensibly put my money to use without having to panic if it goes wrong?" There's a dramatic difference between these 2 mindsets.
I'm not saying the opening pieces of advice are inherently wrong, but what I'm suggesting is that they are certainly not always the optimal way to act. If you can identify suitable opportunities, and if your staking is correct in relation to your long term expected outcome and your tolerance to risk, you can suddenly start to relax as you stop trying to chase prices up and down the optical illusion we call a ladder, and start doing the very things people have always told us not to do, and be profitable too!
Try experimenting with these ideas and then review how you're performing, both financially and emotionally. You might just be surprised at what can be achieved by opposing conventional wisdom.
