Steps
- You wait for confirmation, then enter on urgency.
- Latency and spread expansion worsen your average fill.
- You place the stop at the ‘original’ level, not the level your fill implies.
- Minor pullback tags the stop.
- You label the setup bad instead of labeling the entry late.
Intervention points:
- Cut size at the first sign the chain is forming.
- Pause when you start “fixing” the last loss with a new trade.
- Stop trading when execution quality degrades.
Antidote
- Pre-plan levels and use limits when possible.
- If you enter late, either widen stop and cut size, or don’t take the trade.
- Track ‘entry quality’ as a metric: repeated late fills are a process leak.
- Stop the sequence: one loss is information, two losses is a warning, three losses is a system failure. Have a hard cut.
- Reduce degrees of freedom: fewer pairs, fewer timeframes, fewer discretionary choices.
- Re-enter only after reset: calm state, checklist passed, size reduced.
Notes
Field checklist
- Measure spread before entering. If it’s abnormal, you’re trading the wrong product at the wrong time.
- If volatility expands, reduce size first. Don’t “solve” it by widening stops with the same size.
- Avoid the predictable liquidity holes: rollover, session open/close, first minutes after data.
- Assume your stop may fill worse than your entry. Price the worst-case, not the brochure.
- If you cannot explain where liquidity comes from, trade smaller.