Steps
Enter during a normal spread regime.
Event window arrives; spreads expand.
Stops trigger on spread, not direction.
You take repeated 'unfair' losses.
Anger creates revenge behavior.
You increase size or tighten stops.
Slippage hits during the next spike.
A friction problem becomes an account problem.
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
Define a spread kill-switch and obey it.
If spreads expand, reduce exposure first, analyze later.
If your edge requires tight stops, trade only tight-spread windows.
- 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
This chain is execution-driven, but the damage comes from psychology. Fix the microstructure and the tilt disappears.
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.