A loss stings. The urge to make it back immediately is strong, and that is exactly when traders size up, skip their checklist and take setups that are not in their plan.

Why it happens

Losses trigger the same stress response as other threats. Under stress, people want to act fast and fix the problem. In trading, acting fast is usually the wrong move.

Rules that help

• Pause after every loss. Even two minutes away from the screen breaks the loop.

• Set a daily loss limit. For example 2R or 3R. When you hit it, you are done for the day.

• Never increase size after a loss. If anything, reduce it for the next trade.

• Re-read your plan. Make sure the next trade is an A setup, not just any trade.

Track it

Mark trades taken within 10 minutes of a loss in your journal. After a month, compare their results with the rest. For most traders the difference is clear, and seeing it in numbers makes the rule much easier to follow.

The bigger picture

One loss is a cost of doing business. A string of revenge trades is how accounts get damaged. Protecting your mindset after a loss protects your account.