Thread by @team3dstocks

I'll tell u the 3 main reasons why u should never renegotiate ur stop.

1) if u cancel/move it, and the stock continues to go against u, it'll be even harder to take the loss b/c at this point the stock will be so overextended that u'll be scared to stop out at the top/bottom

The result? u'll freeze like a deer in headlights as ur brain is stuck between "should i stop out & take this fat loss now" and "but what if i stop out and it reverses?". As ur brain is going back & forth between those 2 options, ur unrealized loss is getting bigger & bigger

Until finally, the unrealized loss is so big that u simply cant take the pain anymore, and throw in the towel as the stock starts to speed up against u. And guess what, 90% of the time, THAT'S the top/bottom.

Great. now u feel like a dickhead. with a FAT loss staring at u.

Reason 2) you cancel/move ur stop loss, and the stock gods reward ur stubborness by reversing the stock and bailing you out. Great. only problem is, that wasnt the stock gods, that was satan him-fucking-self. that's the WORST thing that could happen to u as a trader. why?

Because now u just got a huge dopamine spike (and adrenaline rush) from being down big then back to green. Well, problem w/ dopamine is that 1 of its main roles is to REINFORCE whatever behavior was associated with its release. So now u just planted the seeds for a HORRIBLE habit

So the next time ur stop is about to get hit, u'll cancel it or move it again & again, and god forbid u keep getting bailed out. at this point you're addicted to the high winrate. u think "fuck that ADF guy who always talks about stops. checkout my win rate. trading is easy bro"

Well at this point u made so much profits that ur account is bigger, and u're trading with bigger size now. game over. the market has u RIGHT where it wants u. complacent. overconfident. Butt cheeks wide open for penetration. THAT'S when the black swan stock hits u. account gone.

3rd and final reason why constantly moving ur stops is bad:

YOU NEVER LEARN to refine your entries. See, stop outs are GOOD. Planned losses are GOOD. why? b/c they FORCE u to go back to the drawing board and study ur entries. or ur setup. to see how u can improve next time.

But if u constantly move ur stop or add/add/add, what will force u to refine ur entries? nothing. u'll have shitty entries for the rest of ur life and u wont even attempt to fix it. Until the day when it catches up to u & trust me, u ll pay tenfold. Ok im done.

#BearTipOfTheDay