At initial glance, this statement sounds really easy to follow. After all, what comes to the mind of most people will be positions that are just floating around breakeven points. Closing these positions will be easy given that the amount loss is miniscule.
However, what people will overlook are the losers. The positions that are performing badly and have been doing so for a long time. These positions are hard to close due to the loss aversion that is innate in us humans.
Nevertheless, traders must eventually face the reality of closing such positions as this is a necessary skill for anyone who wants to become successful traders. A trader’s task is to allocate capital to increase its value and the losses should be accepted as sunk cost.
Betting on lame horses in the hope that someday they will become champions is the surest way of losing all your money in the long run.
NEA Price at posting:
$1.58 Sentiment: Sell Disclosure: Not Held
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