Ask any trader or an investor in the stock market or commodities market, he will say, the toughest decision he has to take is when he plans to cut his losses, if his positions goes against his way. The art of decision making is an important department in human’s life. Though decision making is the most important factor in trading, but it is been given the least importance.
For a trader to be successful, he has to be prompt and wise in taking decisions to cut his loss. If he makes a mistake in taking a decision in booking a profit, it will not affect him financially. But, if he makes a mistake in taking a decision in cutting a loss, then his capital would be wiped out partly or completely.
For a trader to take a wise decision during cutting his loss, he should plan his trade before he enters it. If he enters the trade with proper planning, then he will surely know, when to enter and when to exit.
Entry and exit are the important decisions, but, exit is the more important of these two. Even if you make a wrong entry, you will be saved by correct exit. Suppose you make a correct entry but you fails to make correct exit, then you will end up loss.
Traders who have mastered this art are the ones who are making consistent profits in speculative markets. This type of traders will be only a five percent of the total traders. The other nifty five percent traders are losers.
You decide in which type of traders you belong to.