Anyone who has read even the most basic of trading texts has read this maxim as it relates to money management. For unknown reasons, and without explanation, I have observed that nearly 100% of new e-mini traders will dive out of trades where they have entered into profit and watch their losing trades ride straight into their stop/loss. I often ask why the trader jumped out of a trade and get answers like “I didn’t want to let a winning trade turn into a losing trade,” “a bird in hand is worth two in the bush,” and the most popular, “hey, it was a winning trade, what’s the problem?”
The e-mini trader’s I am referring to above all won their trades but left a good deal more on the table. For whatever reason, there is a distinct tendency to jump out of nice trades at around 8 ticks when it appears the trade might well run a good deal more to the upside. The reason for this is, I believe, based on fear-based trading. If there is no impending doom on the chart there is absolutely no reason to exit the trade for any reason short of death. To fear-based traders, any victory equals success and losses can be equated with personal failure. Of course, neither statement is true because trading is based upon probability and market context.