Keeping losses small in order to avoid huge losses

Keeping losses small in order to avoid huge losses

Why is that so?
From a psychological point of view nobody wants to lose be it stock market or in any situation of life. No One want to admit He/She has done a mistake and termed as a loser. That’s why most people prefer sticking to a losing position, till they are forced to exit as margin pressure increases. They don’t want to be labeled a loser. So they start hoping their position will turn around and end up being a huge winner. The stock then keeps tanking. Then they hope they will be able to sell for a break even. The stock then goes down even more. That’s when being objective and balanced isn’t possible anymore. Losses have become huge and they are trapped.
The cost is simply huge. You lost money. You lost time.

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