Why do I cut winners early and let losers run?

Taking a small profit feels like safety and taking a loss feels like admitting you were wrong, so both choices protect your mood instead of your account. A winner gets closed to lock in the good feeling. A loser gets held because closing it would make the loss real. Behavioral economists call the pattern the disposition effect, and it shows up in retail and professional records alike.

The arithmetic is unkind. A strategy that wins 55% of the time but averages $80 on a win and $120 on a loss loses money: 55 wins pay $4,400 and 45 losses cost $5,400 per hundred trades. Nothing about the setups changed. Only the exits did.

Fixes that work

Decide the exit before the entry. Write the stop and the target, or the rule that will move the stop, before you click buy. A decision made while flat is not distorted by a position you now own.

Let the stop be the only way out of a loser. Moving a stop further away is the most expensive habit in most trading records. If the trade idea is wrong, the stop says so for you.

Use a trailing rule on winners, not a feeling. Trail under the last higher low, a moving average or a fixed multiple of the average range. Any rule you will follow beats a gut call made while the position is green.

Check whether you do it

Compare your average win with your average loss, and look at how far each exit was from the plan you wrote. If wins close well short of their targets while losses run past their stops, this is your leak. Travise grades management as one of its five scores on each trade it reads, so an exit that broke the plan is named on that trade, not discovered a month later.