But even traders with a concrete stop loss or a solid plan can lose logical focus in the heat of a trade. Champion boxer Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.” It’s common for traders to move or cancel stop loss orders, or fail to honor their rules for when to take a loss. When this happens, the growing size of an unrealized loss can cause pure fear to take over, leaving the trader with no idea what to do. They may even think “I can’t take a loss here because I’ll lose too much money”. What would cause such an irrational thought? The belief that an unrealized loss isn’t truly a loss, meaning there is still hope price will come back.

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