There is a common phenomenon in trading: many people start off very well, able to strictly follow their trading system, implement strict stop-losses, and control drawdowns. Their accounts also grow steadily. However, once external disturbances occur, such as market volatility, or after experiencing consecutive losses that disrupt their mindset, or due to a large loss, a series of behavioral changes happen. Actions become more aggressive, the trading system is no longer strictly followed, and then the trader's mentality collapses, giving up completely, until they break the "kill line," become powerless to recover, and their positions are completely wiped out. This is a frequent phenomenon in trading or in life in general, known in psychology as self-efficacy collapse.
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There is a common phenomenon in trading: many people start off very well, able to strictly follow their trading system, implement strict stop-losses, and control drawdowns. Their accounts also grow steadily. However, once external disturbances occur, such as market volatility, or after experiencing consecutive losses that disrupt their mindset, or due to a large loss, a series of behavioral changes happen. Actions become more aggressive, the trading system is no longer strictly followed, and then the trader's mentality collapses, giving up completely, until they break the "kill line," become powerless to recover, and their positions are completely wiped out. This is a frequent phenomenon in trading or in life in general, known in psychology as self-efficacy collapse.
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