Why Everyone Knows Stoploss But Few Actually Use It? The StopLoss Paradox
Let it go down a little further before cutting. This is the opening line of every tragic account liquidation. Everyone knows that not setting a stoploss is gambling, but why, when placing an order, do your fingers go numb and you are too afraid to set a stoploss? 🔸 The Not A Loss Until I Sell Fallacy: This is the deadliest lie in trading. Humans are wired to avoid pain. Closing a trade in red makes the pain real.Keeping it open gives you Hope. You prefer the comfortable delusion of it will come back over the sharp pain of admitting you were wrong. 🔸 The Trauma of Whipsaws: Every time I set a Stoploss, the market hits it and then reverses.This experience creates a psychological scar. You start believing the market is targeting you. So, you remove the shield to avoid the unfairness, leaving yourself exposed to a catastrophic crash. 🔸 Ego and Survival: A StopLoss is an admission My analysis was wrong.Most people would rather lose money than lose face. They hold onto a losing trade to prove they are right, turning a shortterm trade into a longterm investment out of desperation. 👉 Treat it as an Insurance Premium. Reframe your mindset. A StopLoss is not a failure; it is the Cost of Doing Business. Just like a store pays rent, a trader pays small losses to stay in the game. Set your StopLoss at the moment of entry. If you are afraid of whipsaws, reduce your position size and widen your stop.
Would you drive a car without brakes just because you've never crashed before? News is for reference, not investment advice. Please read carefully before making a decision.