🧠 Why the Brain Resists Cutting Losses
1. Loss Aversion (Pain > Pleasure)
Psychologically, losing $100 hurts about 2× more than the joy of gaining $100.
So your brain says:
“Don’t lock in the pain… just wait.”
Waiting feels safer than admitting you were wrong.
2. Ego Protection
Selling at a loss is a public confession:
“I was wrong”
“My analysis failed”
Your ego fights that hard.
Holding lets you keep the story alive:
“It’s not a loss yet.”
3. Hope Is a Drug
Hope activates the same reward circuits as gambling.
Your brain keeps whispering:
“What if it bounces?”
“Just one green candle…”
Markets punish hope-driven decisions relentlessly.
4. Sunk Cost Fallacy
You’ve already:
Invested money
Invested time
Invested emotion
Your brain irrationally thinks selling wastes all that — even though the money is already gone.
5. Evolution Didn’t Prepare Us for Markets
In the wild:
Holding ground = survival
Retreat = death
In trading:
Holding losers = account death
Cutting losses = survival
Your brain is using Stone Age logic in a digital battlefield.
🧠 How Pros Override the Brain
✅ They decide the exit before entering
✅ They treat losses as business expenses
✅ They focus on probabilities, not hope
✅ They protect capital first, ego last
💡 “You can be wrong 50% of the time and still make a fortune — if losses are small and wins are big.”
Bottom Line
Your brain hates cutting losses because:
It fears pain
It protects ego
It confuses hope with strategy
Successful traders don’t eliminate emotions
they build rules that ignore them.
