Traders often fall into the trap of holding on to losing trades, hoping that the price will return to the entry point. However, when they see a profit, they close the trade too early, afraid of losing it. To become a successful trader, it is important to change this approach. You need to learn to close losing trades faster and let the profits run.
Example: You bought ETH at $3,200, but the price started to fall. You decide to just wait for it to recover. But for several months, the price continues to fall. Without setting a stop loss (automatically closing the trade when you lose), you are left with a losing position, unable to use the capital for other trades.
After 4-7 months, the price finally returns to your entry point. Fearing that the price will fall again, you close the trade, breaking even or with a minimal profit. You avoid a loss, but waste a lot of time, depriving yourself of the opportunity to make money on other trades.
This approach can lock up your capital and slow down your growth as a trader.
