The Importance of closing trades | Why Traders Lose Money?

Avoid this dangerous mistake to make profit

There is nothing more frustrating than losing trade at the end which was executed properly at the beginning, made after proper analysis of the chart and all the technical aspects. You’ll sit there and wonder why did this happen again when the analysis, the data and the market all agreed with you and everything was in our favor? "the reason is simple: you didn’t close the trade when you should have because your greed took over and you fall in your emotional trap".

Not closing your winning positions when they turn a payout is a dangerous mistake a trader can make. Selling is when you recoup the investment, part of the investment or, in the best-case scenarios. If you let those trades stay open, hoping that they will make even more money, it is quite likely that you will lose what you’ve earned.

 

Trading or Gambling

Hoping trade can make just a little bit more is dangerously and is pure gambling (both from technical and psychological points of view). You’ve already made the trade, the trade has done what it was supposed to do…" if you sit on it in hopes of getting more, you are risking the original trade and the profit, no matter how small is your profit, a profit in hand does worth more than nothing at all".

It’s sometimes hard to close the deal when the payout is less than you’ve expected — say, it is 10% when you’ve been expecting a 20% profit. But here is the real question: is it better to risk that 10% to reach 20% or save what you’ve got? ask yourself: when will you feel better? banking a profit or risking everything to reach your target? And what if that gamble doesn’t pay and you lose more rather than making a profit, how would you feel then? Would you feel good knowing that you lost your investment and the profit you’ve already made because you willfully risked a payout you already had?

The importance of closing trades

When it comes to trading the meaning is simple: your payout in the hand is worth more than a payout you think you can make. Taking the small profit now means you may be able to make two or three more trades. Small payout is the best payout because it is more likely to achieve consistent results and may add up to big money quicker than a losing streak.

If you want to stop doing this mistake, you should have "a plan to exit your trades or you can make plans when you sense some tension in the market and there are chances you may lose". This may mean taking profits at a set percentage of the original trade, or it may mean closing the trade when the price action reaches resistance or support area and you are finding rejection from these areas. In all cases, it means you must have a selling plan in your trading, follow it or else pay the price.

General risk warning: your capital is at risk

NOTE - You will find an uncountable number of strategies telling you when to enter trades but none of them have any clear plan about when to exit, it's because we can't set rules when to close the deal, there is no fixed pattern formation that can help. It all depends on a trader's own mindset and experience. It's you who will decide how to react when you are in a profitable deal because once you are in a bad habit of gambling your profit to make more because of your greed it will grow more and we all know greed and fear are the biggest evil for a trade and the ultimate result will be a big zero in your account. So, once you are in a profit-making deal start thinking about when to exit safely without falling for your emotions because a profit, in the end, is the only thing that will put a smile on a trade's face.

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