7. The Three Losses That Changed Everything

John Fitzgerald Doe thought he had learned enough to avoid being surprised. He understood trends, used EMAs, paid attention to position sizing, and kept his Trading Journal up to date.

Then three losing trades arrived in a row.

He shrugged off the first. The plan had been sound, the stop had triggered, and the loss had been within his limit. After the second, he checked the price more often and wondered whether something in his strategy had stopped working. After the third loss, one thought kept returning to his mind:

I need to make that money back.

The Fourth Opportunity

The next day, John sat in front of another chart. The setup did not fully meet his entry rules, but he no longer saw only the market. He saw the three losses. If he won now, perhaps he would feel confident again. If he opened a larger position, perhaps he could recover what he had lost more quickly.

His finger hovered over the button.

Then he remembered a rule he had written for himself: **we do not enter a trade to recover a previous loss. We enter because the current opportunity fits our plan.**

John leaned back and did not click.

It was harder than it sounded. The tension remained even after he skipped the trade, and a few minutes later the market really did move in one direction. For a moment, John thought he had missed a great opportunity.

Then he asked himself the more important question: at the moment of entry, would the setup have met his rules? The answer did not change just because of where the price moved afterward.

What Do the Losses Actually Tell You?

That evening, John opened his Trading Journal. He did not look only at his account balance. He reviewed all three losing trades: had he followed his entry conditions, defined the risk in advance, and closed the positions according to his plan?

The journal showed that all three trades had followed his rules. The losses were unpleasant, but they had not resulted from undisciplined execution. John understood that a strategy’s results naturally fluctuate, and even a consistently applied method can experience several consecutive losses.

That did not mean he should ignore every losing streak. If his journal showed that market conditions had changed or that he was repeatedly breaking his own rules, further investigation would be necessary. But three losses alone were not enough evidence that he needed to change everything.

A Break Can Be a Decision, Too

John decided to stop trading for the day. Not as punishment, and not because another loss was inevitable. He simply recognized that the urge to win his money back was already influencing his thinking.

The next day, he returned to the charts with a clear head. He continued to follow the same rules, and when a genuinely suitable opportunity appeared, he made his decision within his usual risk limits. The trade turned out to be profitable, but John knew that this was not what made the story a success.

The real success had happened the day before, when he chose not to open a position just to recover his money.

The Role of the Academy and the Journal

At the Academy, John had learned that losses are part of trading and that decision quality cannot be judged solely by the eventual outcome. His Trading Journal helped him distinguish rule-following losing trades from losses caused by his own mistakes.

That distinction mattered. If he had replaced his strategy after every loss, or increased his position size in an attempt to win the money back, he could easily have exposed himself to even greater risk.

John now understood that sometimes the best next step is to avoid taking the wrong one.

John’s Takeaway

Three consecutive losses are frustrating, but they do not, by themselves, prove that a strategy is broken. The important questions are: did you execute the trades according to your rules? Do the results fall within the expected variability of your method? Do you have enough data to justify a change?

**The lesson:** don’t use the next trade to recover the previous loss. Make the next decision based on the next opportunity.

note: This story is for informational and educational purposes only and does not constitute investment advice. The risks of losing streaks depend on the strategy and market conditions; disciplined risk management does not guarantee profits.