When Instinct Overcomes Discipline: Decoding a 50,000 USD Loss

Below are 3 classic psychological traps that have “killed” this account:

1. Reverse Position Effect (The Disposition Effect): “Holding losses like a god, holding profits like a rabbit” This is the most painful paradox in this picture: * When Green (Profit): The FEAR mentality dominates. You fear the market will turn around and take away the $200, $500 profit you just saw. You hastily take profits to feel safe (“money in the pocket is certain money”). That is why your green columns are very low and consistent. * When Red (Lỗ): The psychology of HOPE ascends to the throne. When the command goes negative for $1,000, the brain says, “It's going to come back.” When it was negative for $5,000, the brain said: “Now it's time to cut, it's a real loss, a little more effort to break even will cut”. * Result: You sold the “stars” (winning orders) too early and held on to the “destroyers” (losing orders) too long. You are feeding losses to devour the account and killing profits before they have a chance to grow.
2. The trap of “Sunk Cost Fallacy” (Sunk Cost Fallacy & Revenge Trading) * After losing a large amount, your mindset shifts to a state of frustration. You no longer trade according to the market; you trade with the desire to get your money back from the market. * When the mentality is “I have to untangle”, you unconsciously increase the volume (volume) twofold, threefold. You ignore the Stop-loss because you think that “This time I can't be wrong anymore.”

• A devastating blow when the market goes against that stubbornness. That is the price of letting the EGO be higher than the market.

3. The illusion of Frequency (Frequency Illusion) You have a win/loss ratio of 50/50 ( the number of green days is equal to the number of red days ). This creates a dangerous illusion: You feel like you are still in good control, you can still “read” the market correctly half of the time.

• This feeling of “I'm still right” makes you complacent. * But in trading, how many times you are right is not as important as how much money you make when you are right, and how much you lose when you are wrong. You can be right 10 times picking up pennies, but just one wrong time ( on 11/11) can burn your house down. A lesson etched in one's heart and mind This account does not die because of a bad market. It dies because of Asymmetric Psychology (Asymmetric Psychology):

“We accept unlimited risk in exchange for a limited profit.” To change, you must go against your instincts: * Learn to accept small pain (Cut losses early ) to avoid large pain (Account burn ). * Learn to endure discomfort while holding on to interest ( to let profits run ) instead of seeking false safety ( by cutting losses ). * Eliminate the “rescue” mentality. The market does not owe you the money you have lost. Each new order is a new beginning, unrelated to the past.