Steps
Wrong order type or wrong size
Exposure exceeds plan
Fast market reveals the error
Panic actions: cancel/re-enter, remove stop, add ‘to fix’
Costs and risk explode
Account takes a disproportionate hit
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
Use a checklist. Make size a deliberate confirmation step. If you make an ops mistake, reduce exposure immediately.
- 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
Why checklists work
They catch the predictable errors humans make under arousal. This is aviation logic applied to trading.
Related truth: Most blowups are operational.
Field checklist
- Write the rule in observable terms: if X, then Y.
- Remove choices under stress. Choices become rationalizations.
- Track the precursor: what state were you in before the mistake?
- Make deviations costly (size down, pause, review).
- Turn lessons into gates, not notes.