“One good trade could wipe out everything I lost today.”
Have you caught yourself thinking this?
Why does the possibility of recovering everything make taking a larger risk suddenly seem reasonable?
What's happening psychologically?
The mind has begun focusing on the reward of recovery rather than the risk of the next decision. After a difficult session, the possibility of erasing the day's losses in one trade can feel especially attractive. The imagined relief may change how risk is perceived.
A position size that would normally seem excessive can begin looking necessary. A setup usually rejected may suddenly appear worth taking. The trader is no longer considering only what the market offers, but also how quickly it could remove earlier discomfort.
The size of the previous loss has begun influencing the risk of the next trade—even though it does not improve that trade's probability of success.
Often preceded by
Significant drawdown, repeated losses, frustration, urgency to recover.
May involve
Reward anticipation, loss aversion, distorted risk perception, selective attention to potential profit.
Can lead towards
Oversized positions, excessive leverage, poor risk decisions, deeper drawdown.
Catch it
Notice when you calculate how much you could recover before determining how much you should reasonably risk.
Interruption question
“Would I choose this position size if I were already profitable today?”
When this thought might be reasonable
A valid trade can produce a significant gain. Its potential profit does not justify additional risk solely because earlier trades lost money.