Few traders have mastered the art of controlling their emotions when trading. Seeing real money in front of their eyes makes a trader react in irrational ways. Traders get out of their winning positions early because they are gripped by anxiety that it may not last.

When a trade moves into positive territory, it validates the trader’s decision. A sense of joy and accomplishment fills in the trader as the market starts moving in the direction of his trade. If the trend is strong, and there is momentum in the market, this position may become even more profitable, and far sooner than what the trader anticipated. This is an enviable position to be in, but the oracle trader is now faced with a critical decision.

Does he stay in the trade and hope to earn even more? Or, does he take what the market has given him, and get out a winner? He is caught between greed and fear.

The trader has no way of knowing that the market will keep going up. He is afraid that the market may turn around any moment and head back, wiping out his profit. In order to preserve his winnings, the trader gets out. More often than not, the market continues marching on, and the trader regrets leaving so much more profit on the table.

While the trader is correct in exiting, it would make better sense to exit in a staged manner, rather than in one go. He can set a tight, moving stop loss that tracks the market movement. In this manner, he can squeeze as much profit from his position as possible, without being remorseful of exiting too soon.