The Fourth Cardinal Mistake:
TAKING SMALL PROFITS AND
LETTING YOUR LOSSES RUN
A very common mistake among futures traders is taking small profits and letting losses run. This is often the result of no game plan. After one or two losing trades, you are very likely to take a small profit on the next trade even though that trade could have turned into a large profit-maker that would offset all your losses. Letting your losses run often happens to new futures traders and is not uncommon among professional futures traders. After entering a market, you don't know where to get out. Once you start losing money your tendency is to let your loss get larger and larger as you hope that the market will retrace to let you break even - which of course, it seldom does.
This mistake is overcome by using predetermined stop/loss orders to prevent your losses from running, and following your game plan to take profits at your profit objective.
Next: The Fifth Cardinal Mistake: Overstaying Your Position
Back to Cardinal Mistake #3
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