This video explains that one losing trade is not the real danger. The bigger problem is the trade that comes after it, when emotions take over.
After losing money, many traders feel pressure to “make it back today.” This can lead to faster, larger, and less disciplined trades. A small loss can quickly turn into a much bigger one. This behavior is called revenge trading.
Three Rules After a Loss
1. Set a daily loss limit before the market opens, and stop trading once it is reached.
2. Use a cooling-off rule after a large loss or multiple losses in a row, stepping away from the screen.
3. Reduce position size when returning to trade, instead of increasing risk to recover faster.
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