Steps
Take a trade with a clear invalidation.
Price approaches invalidation; discomfort rises.
Widen the stop 'just a bit' to avoid being wrong.
Invalidation disappears; the thesis becomes vague.
Position stays open longer; financing/friction accumulates.
Another widen or an average-down feels justified.
Margin buffer shrinks; decision quality collapses.
Forced close or panic exit locks in a large loss.
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
Invalidation is sacred. If you feel the urge to widen, reduce size or exit.
Require a new thesis and a new invalidation before staying in.
Write: 'If stop is touched, the trade is dead' and obey it.
- 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 common because widening feels like control. It’s not. It’s the removal of the only objective line in the trade.
Related: invalidation, risk creep, sequence risk.
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.