Have you ever heard the Kenny Rogers song The Gambler. During the chorus there is a line that says;

You've got to know when to hold 'em, and know when to fold 'em

I want to cover the fold 'em part. This is usually the one that knocks the feet out from under the newbies.

So you have studied the manuals and all the course material. Incessantly, you have read every word, as quickly as possible. You have wired your $1,500.00 to the broker, you would have sent $2,500.00 but, you need to pay the mortgage. You have opened your self-directed account, opting for no broker advice. Who needs advice, you have a secret weapon...your trading manual that came with the course. Besides the broker doesn't realize that you are about to funnel money right out of the market, and into your bank account.

It's Monday morning, you called in sick so you could kick off your trading career. Of course, considering the lack of sleep last night, working today would have been hard anyway. You glance through your course material one more time a few minutes before opening bell. you are planning to trade the E-mini today. The bell rings, and you are off. You are looking to trade the opening gap, That's on page 12.

The market gaps up on the open just as planned, you go short. In 10 minutes the gap is closed and you exit. $75.00 richer for your trouble, well $60.25. Slippage and commissions got some of it. Feeling pretty good about your skill you wait for the next set up.

At about 11:00 A.M. you spot your next victim. It looks like a reversal off of support, You've seen 3 hits at that price level. You quickly double check the book to make sure. The chapter on support and resistance was toward the back, you were a little sleepy when you got to that part. Just as you thought, this is a support pattern. You quickly enter the buy order, you need a stop loss, but the market is moving and you don't have time. You decide to ride it out. You will watch every tick anyway.

After 30 tense minutes you exit with another $60.25 in your pocket. You relax and get some lunch. You think about how you are a quick study, trading is pretty easy.

12:30 time to get back to work. Immediately you you spot a pattern, the pattern started during lunch. This time, you take the time to order a stop loss. You enter the trade and a few ticks go in your favor. Then it reverses, now you're down, down again, and again. A couple of minutes and your stop is hit. Your stop was set at 6 ticks, you wanted to have some breathing room. Down $89.25 on that one. After a couple minutes of feeling sorry for yourself, you notice that the price is coming back. You knew it, you were right all along. That stop is what cost you that money.

The manual said something about confirmation signals. Now that the move is confirmed, you will take your money right back.

You enter on a market order, no stop. You will just watch the ticks like before. The market goes back and forth for several minutes, slowly trending down. Nothing to be alarmed about, it will come back. Then several ticks go against you, then a pause. You think about exiting, but you be down for the day. The next instant the live quote ticker seems to spin, and turns red. You notice that your is heart keeping pace with it. You think, surely it will stop and come back. At that moment it does.

Now you are down several points, at this point you realize that you cannot recover all of it. You are hoping for just a few ticks in your favor before you exit. You wait, then the prices ticks back and forth. After a minute you can't take the pressure of seeing another spinning ticker, you exit the trade down several points. All told you have lost $432.00, almost 1/3 of your account. You decide to study the manual a little more.

Later that evening, you call in sick again. Of course, considering the lack of sleep you'll have tonight, working tomorrow would be kind of hard anyway.

This was a humorous look at this issue, but holding on to losing trades happens to traders everyday. No matter what system you use you have to understand the mathematics of trading your system. Ensure that your system is mathematically viable, and then you must adhere to the system 100%. It is of most importance to maintain psychological and emotional control in all your trades. Always trade with stop loss orders