Anchoring to the entry price and why it distorts exits

[Amanhasnoname]

Once a trade is open, the entry price becomes a magnet for attention. Decisions get framed in terms of getting back to it, instead of what the market is doing now.

A trade slightly under water prompts the thought of waiting to get out at break-even. A trade in profit triggers the urge to protect it, as though the entry was a floor. Neither has anything to do with the current structure of price.

The market doesn't know where anyone entered. The question to ask is whether, at this moment and at this price, the position would be opened fresh. If not, the reason for staying is only the anchor.

One technique is to hide the entry line and the profit display, and to judge the trade by the chart. Some traders use a plain price chart with no position markers.

Another is to write the exit rules before entering, so the decision isn't made under the influence of the anchor.

Would you open this position again at this price, right now?