A trader explains how moving a position to breakeven erases the psychological sting of a loss. Once there, a $1,000 gain feels like a $2,000 win because it's measured against your original risk. The real skill is managing what you can lose, not chasing what you might make.
I am very, very fond of breakeven trades. As soon as I'm in this trade here, let's just say I'm risking $1K. The moment that I can claw this back is a win for me. In my head, I just lost $1K. And if I can get breakeven here and I'm suddenly breakeven, I no longer am down $1K in my head. And then if suddenly I'm up $1K or I'm up $2K or I'm up $3K, this point I'm now— I'm up $1K, I'm actually up $2K because I risked $1K. A lot of people would only see the reward and don't focus on the risk. I really emphasize the risk.
