ST Sir's Best Posts Collection.

Market has uncanny ability to teach and reinforce wrong things on our minds. The market goes against us, we dont cut our losses and then market reverses giving us chance to profit from a loosing trade. So market imbibes on our inner mind that "look if you had cut the loss, you would have unnecessarily lost money....now you saved that loss" and our mind accepts and thinks that not cutting loss is a right thing to do and cutting loss is a waste of money. Same is with booking profits early..many times we book profits early for no reason and then market comes back evaporating our profits...the market tells our mind that "look it was good that you took profits...else now it is gone....." so slowly mind gets conditioned with wrong practices and then market throws a real big loser at us which cripples us, then we take oath that we will follow good trading principles ...and the cycle continues till we get a next crippling loss which takes away all our capital. I always think that all the traders have at some point or the other suffered a crippling loss...we have made small money here and there before it but this large crippling loss has wiped out all the gains and all of our capital...this happens with every trader. Now just think that you acted as if you are on the other side of your trade meaning you have many small losses. small profits but instead of large crippling loss, you have a blockbuster trade which gave you career best profits and now think how lucky you would feel yourself to be....instead of crippling loss, you now have a huge profit in your ledger and small profits and small losses...but never a large loss...good trading practices help you achieve exactly that.
While testing and developing your trading method, you have to consider that the method should be profitable considering all losses and costs....then only it is a real trading method. Stoploss is to prevent those large losses which will take away all your profits and your capital.

Smart_trade