Risk-Off Checklist: 5 Signals to Stop Trading Today
Risk-Off Checklist: 5 Signals to Stop Trading Today
Every trader has a plan for when to start trading. Almost none have a plan for when to stop. That's the problem.
Signal #1: You Hit Your Daily Max Loss
You've lost 2% of your account today. Your brain says: "Just one more trade. I can make it back." That voice is lying. Your max daily loss isn't punishment. It's architecture. Once you've hit it, you're done.
Signal #2: Two or More Revenge Trading Moments
Revenge trading is when you take a trade that doesn't fit your system because you want to make back the loss. Two revenge trades means your rational mind has checked out. The solution is stopping.
Signal #3: You've Slept Less Than 5 Hours
Sleep deprivation is a cognitive steroid for stupid decisions. Your risk tolerance skyrockets. Your impulse control bottoms out. Don't trade tired. Period.
Signal #4: Major News Event You Haven't Prepped For
When you haven't prepared for a major economic event, the odds change. Your edge rel...
Revenge Trading: The 22% Win Rate and the 30-Minute Fix
We told you to wait 10 minutes. The data says that is not long enough.
Earlier this month we published a piece on the drawdown reflex, the biological panic response behind roughly 74% of prop firm breaches. In it we gave you a rule: after any loss, wait 10 minutes before entering a new trade. Let the cortisol drop. Let your prefrontal cortex come back online.
That rule was directionally right. The number was wrong. Here is what the revenge trading data changed about our thinking.
What does the revenge trading data actually show?
Revenge trading has a measurable signature. In journal data it shows up as a specific, identifiable trade: an entry placed within 15 minutes of a loss, at larger than normal size.
Filter for those two conditions and the numbers are ugly. Those trades won 22% of the time.
Sit with that for a second. Your strategy might win 55%, 60%, 65%. Our RVOL + VWAP mean reversion setup wins 64% across 4,672 backtested trades. The same trader, on the same day, trading ...