Then, how should we have decided it?
Those who have read this far should already suspect that
the problem is not about
“cutting losses early vs late.”
That kind of discussion isn’t the point.
The fact that you yourself decide “where to cut”
has already been read by the market.
The loss-cutting position taught by textbooks
is certainly theoretically correct.
- Just outside the highs and lows
- Break of the recent low
- If Dow drops, retreat
None of these are wrong.
Rather, they are all so “correct.”
But that very “correctness” became the problem.
The market is not random.
Where people gather, meaning is created.
In the same place
For the same reason
The same loss-cut is placed.
That place is not a “defense line,”
but a line to reap/harvest.
That’s why it happens.
- You get cut off by a brief wick
- Immediately afterward, it moves in the anticipated direction
- Feeling like you’re the only one who lost
This repeats itself.
So what should have been done?
Most people think at this point
“Set losses farther outside”
“Take wider margins”
and so on.
But that is only shifting the bait a little.
The essence isn’t there.
The problem is
**not the “loss-cut position,” but the
“agent who decides the loss-cut.”**
As long as a human decides,
there will be
- Expectation
- Fear
- Hope
- Memories of the past
that inevitably mix in.
And the market will
exploit that “fluctuation” the most.
Now, one thing to consider.
If
loss-cutting
and taking profits
were processed calmly, without any emotional involvement
then?
- There would be no hesitation
- No pulling back
- No praying
There,
there would be no concept of “good or bad” at all.
Those who have come this far should already understand.
The difficulty of loss-cutting is
not technical
nor knowledge.
The fact that a human is making the judgment
has been the biggest weakness.
Next time,
we will jump straight to the core from here.
? “Why is profit-taking actually more dangerous?”
When you first hear this,
many people think
“Is that why I couldn’t win?”
Let’s continue.
