I understand the feeling of wanting to cut losses because the expansion of "motechooka" (moteyoka) is scary

The slogan to avoid cutting losses into poverty is often heard in FX-related books and websites. Yet many people misunderstand what "cutting losses" really means, and they don’t understand the difference between investors who can cut losses and those who cannot. Perhaps there are so few investors who truly understand cutting losses.

Until now, I’ve hesitated to cut losses because I was afraid of the favorable trend turning against me.

Why can’t I decide? Why do I hesitate? To search for the cause, I examined my own past. If I analyze objectively the experience of taking a fatal hit and becoming unrecoverable, I believe I will understand the true reason I hesitate to cut losses.

If you actually investigate, you’ll find that the reason I hesitate to cut losses is my history of repeatedly seeing investments reverse right after I cut losses.

That is why even when the loss signals clearly light up, the memory of being forced to admit I was late to buy after I cut losses, and the bitter past experiences flash back, causing me to hesitate to cut losses to avoid a mental fatal blow after the cut.

Therefore, I would conclude that the correct approach is to judge technically without fearing cut losses. If you still become poverty-stricken by cutting losses, then you either misinterpreted technical analysis or you lack study; one of the two.

If there is evidence supporting profitable technical analysis, your worry about cutting losses will lessen.

If you think about the causes of hesitating to cut losses in reverse, you’ll understand: even after cutting losses and realizing the loss, if you have confidence you can regain the losses, you won’t hesitate to cut losses. That is why, unless you have confidence that you can recover the losses, you would rather not cut losses and continue to hold with hope in your heart—the sweet and appealing option.

Ideally, cutting losses should be: verify the chart, create a profitable technical approach, and when buy/sell signals light up, honestly close the position.

The fear of hesitating to cut losses!

Heading toward extinction with hopeful expectations. Do you understand the feeling of wanting to press the cut-loss button but not being able to because you know the technical indicate further decline?

In front of an abrupt drop with swollen unrealized losses, the losing investor would think there is no confidence to recover even if they cut losses now. They would probably evade reality and hold on, hoping the price would recover. They fall into a thinking pause and end up as an observer of the market with unrealized losses.

When you slip into the observer prayer mode, you will live days of watching unrealized losses up to a forced margin call. You gather information to feel secure, twist unfavorable information into something positive, and tell yourself that HODL is correct.

Then—simply cut losses mechanically, hahaha

That is absolutely impossible. Cutting losses is the one thing I cannot do... Sure, if you brace yourself and cut losses, it might remain a fatal blow, but the bitter experience of reversal right after cutting losses makes you hesitate to cut losses.

If only I had cut losses then, I might not have been swept into the crash or suffered a fatal wound unrecoverable by now; or I might later regret cutting losses after it reversed sharply and I delayed buying, causing tears of regret.

If I hadn’t cut losses, I might have survived... this feeling distorts judgment. Even after cutting losses, fear of further losses makes you late to buy and tearful. Therefore, after cutting losses, it is important to take a break from the market, or trade according to your technical judgment, or face the market according to your own trading rules.

If you interpreted the technicals you rely on incorrectly, it’s natural to become poverty-stricken by cutting losses, and continuing to hold while watching unrealized losses is a difficult opportunity-cost problem ∩(´∀｀)∩

If you decide to judge buy/sell with only the technical you are good at, you will understand support/resistance, catch trends more easily, and identify a higher-probability timing for profits, so you will stop hesitating on taking profits and cutting losses.

Experience in cutting losses, and the experience after cutting losses, are both important to remember (o^-')b

Investors rely on experience rather than talent, so think seriously about your criteria for cutting losses ＼(^o^)／