Good Trades Can Lose. Bad Trades Can Win.

Every trader has experienced this at some point: a flawless trade that loses money, and a completely reckless trade that makes money.

A good trade isn't one that makes money; it's one that follows your process and aligns with your edge. A bad trade isn't one that loses; it's one that breaks your rules and wins anyway.

Watching short-term winners or losers reveals very little. Edge doesn't show up over a handful of trades; it takes hundreds. You can run positive-expectancy trades that lose ten in a row, or completely reckless trades that win ten in a row. In either case, the sample size is statistically meaningless.

Most traders get into danger when they double down on the reckless trades because they happen to be working.

That's the most dangerous phase for a trader. The same behavior that randomness rewarded you for is the same behavior that guarantees you'll eventually blow up.

The Market Loves to Reward Bad Behavior

The market loves to reward bad behavior. It lets you taste success from doing the wrong thing, because now it has you exactly where it wants you.

The market wants you to:

• Keep repeating that same reckless behavior.
• Size up.
• Start believing that the rules don't apply to you.

Because when the reversal comes, and it always comes, it takes everything back.

The market doesn't blow you up right away. It feeds you first. It seduces you with streaks of profit, then punishes you for believing those profits were skill.