Many people tend to make detailed plans with some degree of fixation on a specific scenario. It is a great thing to do, however, getting too fixated on a singular plan can result in tunnel vision. The danger is that this can blind you from seeing alternative possibilities and making plans for these.
Humans are rationalizing creatures, constantly searching for justifications of prior beliefs as a way to soothe our egos and validate our past decisions. This pattern is called escalation of commitment. People who follow this patter have a stronger tendency to stay the course even in tasks at which failure is inevitable. The trick is to see the fine line between heroic persistence and foolish stubbornness, then take necessary steps to correct the course.
One of the things that can help you fight this is to conductregular checkups on the trading position and current market factors.
Ask can also yourself the following questions:
- Did the high-probability scenario play out as expected?
- If not, are there any remaining factors that support your initial bias? Or does it make more sense to cut losses at this point?
- Were there any other potential outcomes you might have missed? And how can these impact market bias moving forward?
- Are there any factors that could warrant a pivot from your original trade idea?
- Which upcoming events might still affect your position and how?
You need to reevaluate the situation and identify biases that are no longer relevant to the current market environment. If you do this, it will become easier to rethink whether or not it is worth holding on to a trade.