In the past I have talked about a profitable loss feeling, which is a feeling you have when you are in profit but you feel like you in a loss because you were once at a higher profit. It’s all psychological and mental. Being an asset trader, be it crypto, or forex, when you trade them and you at profit, mentally you feel a little bit elevated in your head. You feel $X richer depending on how much profit you are in. For instance, if you are $10k in profit you start feeling like who is $10k richer, as a human being you are greedy in nature so you want more.
Because you want more, and the current feeling of what you have is nice and you want to feel more dopamine, you risk it by not taking profit, risking the chances of gaining more. Sadly things didn’t turn out as you expected and the profit is reducing, using the picture above the profit is reducing from $1 Million. Now you are down to $200k and the possibility of it going below that hit you and you take the profit, you will start feeling like you just lost, even though you were in profit. This is because of the experience and journey attached to it. That experience and journey where we saw the money increase to $1 Million and watch it go down to $200k makes it really sentimental.
Because if the case was different, for instance, you invested $50k on a project and went to bed, the next morning you wake up and see $200k then check the chart and realised that there is long red wick candle, meaning that sometime in the night your money was once worth $1 Million but it still went down. This will make you take profit faster and be grateful you woke up to take it at $200k. You won’t feel sad about the $1 Million any more because the experience and journey of watching it go to $1 Million and back to $200k
