Loss aversion
Losing money hurts more psychologically than earning the same amount feels good. Hence losses held too long.
Loss aversion — what it is?
Loss aversion is a trait of the mind whereby a loss is felt roughly twice as strongly as a gain of the same size.
The direct consequence shows up in everyone's trading: profits get taken quickly so as not to lose them, while losses are held in the hope that price comes back.
The result is a system that mirrors the one you need: small profits and large losses. With that ratio even a high win rate does not save you.
Loss aversion — how it is built?
The cure is not willpower but mechanics. The stop and the target are set before the entry, and the exit decision is made while there is no position yet and nothing to feel anxious about.
Loss aversion — common mistakes
Closing a profit "before it gets taken away".
Moving the stop to give the trade a chance.
Sitting out a loss instead of closing it by plan.
Believing that next time you will hold on by force of will.