Lessons › Why traders lose › The 24-hour rule
World 11 · Why traders lose · lesson 25 · level 2
The 24-hour rule
After a big loss or a broken rule, place no new trades for 24 hours, because the tilt loop cannot run without a next trade.
In one line
After a big loss, your next trade is not really yours: the loss picks it. One rule takes that trade away, and it costs you one day.
Explained simply
Tilt, trading while a loss still stings, works like a loop: a loss, then a bigger trade, then a bigger loss. Every turn needs one thing, a next trade. The 24-hour rule takes it away. After a big loss or a broken rule, you place no new trades for 24 hours. Not smaller trades: none at all. Close the trading app and walk away. Decide now, while you are calm, what counts as big, and write it down. Use the free day to write about that trade, and read it tomorrow before you place anything.
A worked example
An example of the loop: the first loss is $100. The next trade is twice as big and loses $200. The next is twice as big again and loses $400. One bad day: $100 + $200 + $400 = $700, seven times the first loss. With no trade after the first loss, the day would have cost $100.
Mistakes to avoid
- Taking smaller trades during the 24 hours instead of none.
- Deciding what "big" means in the middle of a loss, when your mood decides.
- Keeping the trading app open and watching the screen all day.
- Skipping the write-up, so tomorrow starts where today ended.
Check yourself
After a big loss or a broken rule, what does the 24-hour rule say?
No new trades for 24 hours. Not smaller trades: no trades at all. Close the trading app and walk away from the screen.
When should you decide what counts as a big loss?
Now, while you are calm, in writing. Decide while you are calm and write it down. Then the rule decides, not your mood.
Why does taking away the next trade stop the tilt loop?
Every turn of the loop needs a next trade. A loss, a bigger trade, a bigger loss: each turn runs on a next trade. Take it away, and the loop has nothing to run on.
What makes the 24-hour rule stick?
Writing down the trade and reading it before trading again. Write down what you planned, what you did and how you felt. Tomorrow, read that page before you place anything.
You skipped your stop and lost $100, less than you planned to lose today. What does the 24-hour rule say?
No new trades for 24 hours: you broke a rule. The rule starts after a big loss or a broken rule. Skipping your stop is a broken rule, whatever the size of the loss.
Goal of this lesson: Write down what counts as a big loss for you, and stop trading for 24 hours when it happens.