Steps
Early wins raise confidence
Size increases and standards loosen
A normal loss feels ‘unfair’
Trader tries to win it back quickly
Risk clusters into a single bad day
Month’s P&L is damaged in hours
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
After big wins: reduce size, cap trades, or stop for the session. Green-day rules are survival rules.
- 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
Discipline after reward
Most people tighten rules after pain. Pros tighten rules after reward.
Related truth: Your best day is your most dangerous day.
Field checklist
- If you feel urgency, you’re likely late. Late trades pay the spread twice: once in price, once in behavior.
- After a loss, add a cooldown. Your brain is now biased toward revenge sizing.
- If you’re negotiating rules mid-trade, you’re already off-plan.
- Use a checklist to prevent story-trading.
- Stop when your decision quality drops, not when your account hits zero.