A natural extension of Rule #3, protecting capital is the single most important step in wealth management. All your winning trades and associated gains are worthless if all you’re doing is frequently giving them back through because of a few lousy, portfolio-busting trades.
Why are people afraid to take losses? Generally, it comes down to ego or being afraid to admit being wrong. It’s as if traders have something to prove to themselves (or others) and by realizing a loss, they’re admitting they were wrong or not good enough.
Far too many traders and investors obsess over winning trades. I get it, a big 100% gaining trade is
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