Sunk-cost thinking: why are you still in that losing trade?
The money already lost in a position is gone either way, yet it anchors the decision to stay: "I can't close now, I've given up too much already". The anchor is psychological, not financial.
Have you felt it?
- the losing trade you held for sunk-cost reasons
- the thought process at the time
- how you broke the anchor
The stop-loss guide pre-commits the exit before the anchor forms.
Background: Where to place a stop-loss: structure, volatility and time stops
A stop-loss belongs where your trade idea is proven wrong, not at a round number of pips. Here are the main methods and the mistakes that trigger stops early.
How far away should a stop-loss be?
Far enough that normal price movement doesn't reach it, at the point where the reason for the trade would be proven wrong. The position size should then be set so that distance costs a fixed share of the account.
Why was my stop-loss hit when the chart didn't reach it?
Charts usually show the bid price, but sell positions are closed at the ask. When the spread widens, the ask can reach a sell stop while the bid line on the chart stays below it.
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