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Cooling-off period

A mandatory pause after a loss, a streak or a limit breach, on the basis that the next decision is the worst one you will make.

The case for a cooling-off rule is behavioural and well-evidenced: immediately after a loss, traders take more trades, take them faster, and size them larger. That is revenge-trading, and it does not feel like revenge from the inside - it feels like conviction.

Make the pause specific and short enough to survive. Fifteen minutes after any loss exceeding 1R, one hour after two consecutive losses, the rest of the session after a daily-loss-limit breach. Long enough to break the state, short enough that you will actually honour it.

Measure whether it works. Tag journal entries with time-since-last-loss and compare expectancy across buckets. Most traders find that trades taken within a few minutes of a loss have visibly worse statistics than the rest of their record, which turns a discipline argument into an arithmetic one.

Related: daily-loss-limit, kill-switch, revenge-trading, tilt

Educational only, not advice. Spotted an error? Post in Site Feedback.