I've been watching the market the last few days and it reminded me of an old trade. Nothing special about the trade. I bought a stock, it went the wrong way, and I already had a stop before I bought it.

At the time it seemed pretty simple. If the price got down there, I was wrong and I'd sell. I don't remember having much trouble with that decision before I bought the stock.

Then I bought it and the price started dropping. At first it was still above my stop, so no big deal. Then it got closer and I started watching it more. Finally it went through my stop.

I didn't sell.

Instead I started coming up with reasons to wait. Maybe it would bounce. Maybe the whole market was just having a bad day. Maybe I put my stop too close. Maybe I should give it another day. And of course I started thinking about how stupid I'd feel if I sold and the thing bounced right after.

That's the part I still find kind of funny. I didn't have any of those reasons before I bought the stock. They all showed up after I was already losing money.

I remember sitting there looking at it and thinking, I picked this stop myself. Nobody made me put it there. It made sense when I wasn't in the trade. Now the price is below it and suddenly I'm trying to explain to myself why the stop doesn't make sense anymore.

The price going through my stop sucked, but that wasn't really the problem. The problem was I still didn't sell. I could always find one more reason to wait.

Watching the market move around lately made me think about that trade again. I'm sure I'm not the only one who's done this.

So I'm curious how you guys deal with it. How do you know when you have a good reason to change the plan, and when you're just making up a reason because you don't want to take the loss?

Watching Markets 

So I'm curious how you guys deal with it. How do you know when you have a good reason to change the plan, and when you're just making up a reason because you don't want to take the loss?

@Watching Markets

A classic problem. The moment real money is on the line, the brain takes over and evolutionary speaking, that's exactly the wrong instinct for trading. Your description is brutally honest and breaks down perfectly into phases that every trader goes through:

1. The Hypothetical Phase

You had a market analysis and a thesis. From that, you derived a plan (entry + stop). Setting the stop made perfect sense. But that decision was easy because it was purely hypothetical. No money was emotionally exposed yet. (A decision is easy as long as it's hypothetical. It only gets hard when these five factors collide: money + uncertainty + real-time + loss + hope.)

2. The Shift in Perception

Then you're in the trade. The market approaches your stop and your psychology kicks in. From here on, your perception shifts. You're no longer just watching: "What is the market doing?", but increasingly: "What is the market doing to my money?" The stop controls your financial risk, but it doesn't automatically control your emotional reaction.

3. The Moment of Truth

The market hits your stop. This exact moment is what you ran through the entire decision-making process for! That was the whole point of your plan: protect capital when the thesis is wrong.

4. Renegotiating the Plan

And this is where it all falls apart. The market is still the same, but your situation has changed. You start renegotiating your rules after the fact. You don't ask yourself: "What new market information justifies staying in the trade longer?" Instead, you're just looking for excuses why you shouldn't sell yet. At this point, you're no longer protecting your capital. You're just trying to avoid the uncomfortable feeling that a realized loss brings. You didn't adjust the plan; you just delayed the pain.

Reading this back, you can probably see exactly where we all make our mistakes. I know this from my own trades all too well. Objectivity in trading doesn't mean having no emotions. Objectivity means not letting them drive your decisions.

To answer your question directly: How do you know if you should change the plan or if you're just making excuses?

A good reason to change the plan comes from a shift in the information landscape (the market has structurally changed).
A bad reason comes from a shift in your emotional relationship to the loss (you just don't want to feel the pain).

The art of trading isn't about the rigid dogma of "I never change my plan!" It's about the discipline of: "I only change my plan when there is an objectively justifiable market reason."

Symple