The decision to exit a trade is very different from the decision to enter a trade. Why? You can wait until the market is in a condition where you feel the time is right to enter, and a good trade can be made. Before entering, you do not have to risk any money, except opportunity cost. When exiting you cannot simply watch. Once in the market, you must accept whatever the market does or get out immediately. You can no longer wait, but are now at the mercy of the market.

If the market moves in an unexpected manner you may lose substantial sums of money. You must always decide whether to stay with a position or get out. This is not the case before entering a position.

When is the stress and the pressure greatest when trading-before entering, while a trade is on, or after exiting? Most traders would probably agree stress is greatest while holding a position and less before a position is put on or after it is taken off. This is why many people reject paper trading as not realistic. There is no way to simulate the amount of pressure you must undergo when holding a position. Even if a loss is experienced after a trade, there is at least a sense of resolution, which is an important way for most people to reduce stress.

The entry decision is indeed important, but you can always walk away and wait for another time to play. You are not allowed this luxury when exiting and must follow and sometimes suffer through the trade. Of course, some traders can walk away and forget about their positions by having the brokerage firm send them a margin call, but this is a passive decision to avoid pain and responsibility as well as a means of denial.

Many traders equate longer holding times for a trade as a way to make more money in an attempt to squeeze the last penny of profit. We are often brought up to learn to work long and hard to complete an endeavor. Trading is different. Markets can make extreme moves quickly and then do nothing. Markets may move in exaggerated ways, but this is simply the reflection of the participants in the market.

A good way to develop a trading method is to try to draw the movement of the market. You may find it difficult to simulate the jagged and confusing moves of a market, but this will help to see how the market actually moves.