It’s a flaw in our brilliant minds and one that afflicts most traders. It’s a big reason why 90 percent of traders fail.
I’m watching one of my students trade a few weeks ago and he keeps taking these ridiculously small wins. Over and over again, he takes these small .3R gains only to watch the stock run without him. I don’t say a word and just watch.
He is in agony.
I mean it looks like he has literally been slapped in the face. Finally I ask him why he keeps taking these small losses.
His response is priceless (actually it’s costly):
I don’t know what is going to happen so I’m protecting my profit.
And there you have it.
We are wired to choose unhappiness over uncertainty.
This novice trader knows he can’t succeed continually taking these small wins since two regular size losses will wipe them all out. That’s why he’s unhappy about it. Yet he can’t control himself.
He’s inflicted with the uncertainty disease, feeling more discomfort with uncertainty than unhappiness.
Fight your programming and embrace uncertainty.
It’s the only way you succeed.
Uncertainty is the way.