Cut your losses short- don’t fall in love with your trades. Here’s why:

The Trading business may appear simple and easy to those who are unaware of the challenges a trader faces in this profession.

A difficult endeavor, A trader must manage various tasks like analyzing the market, studying the micro-macroeconomics, interpreting a myriad of numbers, and staying alert round the clock! Yet, one of the toughest challenges traders face is dealing with their own emotions.

“If you personalize losses, you can't trade.” - Bruce Kovner

Only a couple of traders truly understand the essence of trading and grasp the concept of treating it like business. In this world of trading, losses are inevitable, but a trader’s job is to keep these losses small and ensure these losses are covered by profitable trades.

It is highly imperative for a trader to understand that the Market is Supreme, and one cannot outsmart it. Therefore, it is advisable to align with the market’s direction. Any attempts to go against the market’s flow will lead to a perpetual loss of capital.

Let Me Share My Recent Personal Experience with You All.
• A vivid illustration of why managing risk and cutting losses is vital and why you must calculate the risk first and then the reward before entering any trade.
• I had a long position on Gold, entering at an average price of $1900 when Gold was trading at $1915.
• Soon the market witnessed a decline and the gold prices lowered below $1885.
• Anticipating a huge sell off if, gold prices broke the level and closed at $1885, I quickly decided to exit around the position of $1880, incurring a loss of $2000 per lot.
• If, I would have stubbornly held on to my position on Gold, with hopes of a price reversal and covering my initial costs, I would have incurred losses worth $9000 within a mere 6-7 days.

So, Here’s A Quick Lesson for Traders:

Seize the opportunity to cut losses and wait patiently to re-enter the market for good opportunities.

PS. I re-entered the Gold market at around $1812-$1815, and the same day experienced an upward movement, with Gold closing at $1832 on Friday.

At present, Gold is trading at $1880.