One of the most quoted trading commandments on Wall Street says that you should: „Let your profits run and cut your losses short“. The trading wisdom of letting profitable trades run as long as possible and limiting losses is one of the oldest and most quoted trading “rules”. As a trader you can of course open and close a position whenever you want – but it is not always easy to do the right thing for the human brain. DISPOSITION EFFECT The reason is the so called disposition effect. This is an anomaly of the human psyche which is analyzed in the field of behavioral finance. The human brain tends to the opposite – letting losses run and cutting profits short.