Sometimes, I go on rants during my Premarket Prep sessions…
But it’s only because I care about my subscribers and I want the best for them when it comes to trading.
That’s the purpose of my Premarket Prep. I go live every day at 8:30 am Eastern to set everyone up for the trading day ahead…
I identify potential plays I see, answer questions, and, most importantly, tell you when you’re doing something wrong.
Call it tough love, or whatever, but if you’re doing something wrong, I don’t want you to keep making the same mistake over and over again.
Recently I’ve been ranting about behavior I continue to see with new traders. These are typical habits, but you need to break them.
I see the same common mistakes and thought processes with new traders…
And if you’re a new trader, I don’t mean to offend, but I’m trying to teach a lesson here so you don’t do these same things.
By the way, if you are new to trading, I have tons of information for you…
First, check out two of my articles on trading for beginners.
https://stockstotrade.com/stock-trading-101/
https://stockstotrade.com/what-is-day-trading/
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What I Always See with New Traders:
They expect every pattern to work, even if, statistically, that is impossible. No pattern works 100% of the time.
And newbies chase everything — every stock that moves, every stock that pops, FOMO takes over…
Maybe worst of all, new traders refuse to lose. They hold on to a trade way too long, thinking it’s going to turn around.
The real mindset here is that they don’t want to admit they were wrong, so they hold onto these losing positions for dear life until the stock dies out and they’re left holding the bag.
This “I refuse to lose,” mentality is a dangerous thing and it’s what I want to dig into today.
The Psychology Behind Holding Onto Losers
Emotions: Most new traders are ruled by them. Whether it’s fear, greed, or hope, emotions can quickly take over your decision-making process.
When you see a trade going against you, your first instinct might be denial. “The stock will bounce back,” you tell yourself. “I’ll just wait it out.”
What’s happening here is called loss aversion, which is the biggest trap for new traders.
Did you know that psychologically, the pain of losing money is twice as powerful as the pleasure of gaining it?
So, when you see your trade in the red, you don’t want to lock in that loss. Instead, you hold, and you hold… and you hold some more, even as the losses pile up.
But that’s not trading—that’s gambling.
We’re not in this to gamble. If you want to do that, go to the casino.
Table of Contents
Why It’s So Dangerous to Hold on to Losing Trades
Hope is not a strategy. Holding onto a losing trade because you “believe” it will come back is nothing more than wishful thinking. Believe me, the markets don’t care about your wishes.
Here’s why holding onto losers can destroy your account.
Small Losses Turn into Big Losses
When you refuse to cut your losses early, what started as a 2% or 5% loss can quickly turn into 20%, 30%, or worse.
Now, you’ve not only lost money, but you’ve also wasted valuable time when you could have been focusing on profitable trades.
You’re Tying Up Capital
By holding onto a losing trade, you’re tying up capital that could be used for better opportunities.
Meanwhile, you’re stuck watching that stock sink tumble, missing out on new setups with real potential. You’re not just losing on that trade—you’re losing on potential winners you could’ve entered.
Emotions Cloud Your Judgment
The longer you hold a losing trade, the more emotionally attached you become. You start making decisions based on hope or fear rather than facts and analysis.
Successful Traders Know When to Cut and Move On
Losing is just a small part of the trading game. I say it all the time, but being a successful trader isn’t about avoiding losses—it’s about managing them.
Top traders don’t get emotionally attached to a trade. They follow their plan, and if a stock hits their stop-loss, they cut it and move on to the next opportunity.
There’s no “what could have beens” with smart traders. They’re able to easily accept a loss and quickly move onwards and, hopefully, upwards.
The key to staying in the trading game is to protect yourself from the big hits:
Protect your downside, cut your losses quickly, and keep your emotions out of it.
How to Avoid This Mistake
Here’s how you can stop yourself from being the rat on a sinking ship:
Set a Stop-Loss and Stick to It
Before you even enter a trade, you should know exactly where you’ll exit if the trade goes against you. This is your stop-loss—and it’s non-negotiable.
Once you hit that stop-loss, you’re out. No second-guessing. No “waiting just a little longer.”
Detach Emotion from Your Trades
Remember, it’s just business. A losing trade doesn’t mean you’re a bad trader. It’s part of the process. The moment you start getting emotional about your trades is when you start making irrational decisions.
Focus on Risk Management
Risk management is the cornerstone of trading. If you’re risking more than you can afford to lose, you’ll find it much harder to cut your losses because they’ll feel too painful.
Only risk 1% or 2% of your account on any single trade. That way, even when you take a loss, it’s just a small bump in the road, not a ten-car pile up.
Watch my video below to learn more about risk management:
Learn from Every Loss
It might sound corny, but every trade—win or lose—is a learning experience. If you cut a losing trade quickly, take note of what happened.
Over time, you’ll start to recognize patterns, and those small losses will become valuable lessons that make you a better trader.
My Final Thoughts
I get it. No one likes to lose…
But if you want to be a successful trader, you’ve got to change how you think about losses. They’re not a failure—they’re just part of the game. Focus on losing small and moving on quickly.
Once you learn to cut your losers, you’ll soon find yourself on the path to consistent profitability. Next time a trade starts moving against you, get out fast, protect your capital, and don’t waste more time moving on to the next opportunity.
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
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