Cut Loss

I've read articles and books telling us about how to make profit from investments, but I've never come across anything telling us about cut loss. When comes to investment, it doesn't mean that we always make money. There are times that we make wrong decision and the investment instead of making money, it turns out to be losing money. So, when you are in a wrong position, what do you need to do and what's the next plan?

Cutting loss, a very important decision especially trading in a fast and volatile market like futures and commodities. Cutting loss means you involved in a wrong decision and seeing your position turning into unrealised losses. Who wanna admit that they actually make a wrong investment decision? Moreover, it is so painful in cutting loss. Cutting loss in other words mean losing money. How could people actually believe that they are losing money and not making money??

In a normal circumstances, human always think that it's just a temporary moment and the investment will come back to your price. But, sadly to say I've seen a lot of people, when seeing unrealized profit, realized profit very quickly, but when comes to lossing money, keep holding and holding till one day when they decided to cut loss, the damage is too big. It is also possible that their stubborness and ignorance could make them lose out the initial capital.

It's not easy to cut loss. It's pain, I know. That's why it is important to have a trading plan before enter the market. And we need to be disclipline when the cut loss price is triggered. Wrong means wrong, when it's time to cut loss means cut loss. When you've loss something, you'll know what to look for in the next step.

Cut loss, it's an essential decision in any investment. It could be also applied in any situation when we've made wrong call in life decisions.