Don’t make trading decisions based on where you bought (or sold) a stock or futures contract. The market doesn’t care where you entered your position. The relevant question is: What would you do if you were not in the market? A common error traders make when they realize they are in a bad trade is to commit to getting out, but only after the market returns to their entry level—the proverbial “I will get out when I am even.” The linkage of liquidation to entry level is one of the major causes of turning small losses into large ones. Why is getting out even so important? It is a matter of ego.
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