Glossary › cool-down rule

Trading glossary · psychology

cool-down rule

A rule that makes you take a break after a loss, so anger does not push you into another bad trade.

The fuller meaning

A pre-set pause after a loss, or after two losses in a row, before any new trade, to break the revenge-trading chain. Rules that act automatically, such as a timer or a daily loss limit, work better than willpower in the heat of the moment.

cool-down rule.

Related words

anchoring · boredom trading · chasing · cognitive bias · confirmation bias · consistency · discipline · disposition effect · emotion · entry rule