Why do people always feel like they can casually lose their unrealized profits? After trading for a while, I’ve realized that both principal and profits are money, yet they’re often treated differently in our minds. If you lose 5% of your principal, you’ll feel so bad you can’t sleep. But if a position gains 30% and then pulls back 10%, you’ll comfort yourself: 'It’s fine, I’m just losing profits.' Then you start widening your stop-loss, increasing your position size, or even chasing other assets with your unrealized gains. In the end, not only do you lose the profits, but you also end up sacrificing your principal. I’ve made this mistake before. My account grew from 100k to 150k, and I treated the extra 50k like chips gifted by the market, trading recklessly. When it pulled back to 120k, I couldn’t accept losing 30k, so I went heavy trying to recover, only to end up back at square one. This is a classic example of the 'casino money effect': as long as profits haven’t been withdrawn or locked in, your brain doesn’t treat them as truly yours. But the market doesn’t differentiate between principal and profits. Every dollar your account loses is a loss of purchasing power and future opportunities. What you should really do after making profits isn’t to immediately increase risk, but to recalculate your position size based on your current net worth and protect the money you’ve already earned. Remember: unrealized profits aren’t free chips. Once they’re in your account, they’re already your money.