When Not to Trade

• Immediately after a large loss. The urge to make it back is strongest exactly when your sizing discipline is weakest. This is the state that produces the trade you cannot later explain.
• Immediately after a large win. Less discussed and nearly as expensive. Overconfidence shows up as a position 50% bigger than the rule allows, taken on a setup that would normally be skipped.
• Tired, ill, rushed, or preoccupied. Trading is a decision-making job, and decision quality degrades with fatigue long before you notice it has.
• Boredom. The feeling that you should always have a position on is not analysis. It is restlessness wearing analysis as a costume.

None of these are moral failings and none of them respond to being told to try harder. They respond to being written down in advance, because a rule written on Sunday is being applied by a different person from the one who wants to trade on Wednesday afternoon.

A worked example of what skipping is worth

Suppose a trader takes twelve trades a month at 1% risk, and four of them are trades their own rules would have excluded: two taken minutes before a rate decision, one in a mid-range chop, one taken twenty minutes after a stopped-out loss. Those four are not random, they are systematically worse than the rest, because each was taken in conditions the plan already identified as unfavourable.

If those four average -0.6R while the eight planned trades average +0.25R, the month is 2.0R of profit from the good trades and 2.4R of damage from the excluded ones, so a positive process produces a negative month. Nothing about the strategy needs changing. Four decisions do. Skipped bad trades are invisible profits, and they never appear in a journal unless you write them down.

Make it mechanical

Discipline applied in the moment tends to lose to the moment. The workable version is a short pre-trade checklist, written while calm, that runs before every entry:

1. Is the setup actually present, by my own written definition?
2. Is there a level that defines invalidation, and is the stop there?
3. Is the position size computed from that stop, not estimated?
4. Is there a high-impact release due within the next hour?
5. Am I in any of the personal states on the list above?

Keep it to five or six items. A checklist long enough to feel thorough is one you will start skipping within a fortnight, and a skipped checklist protects nobody. If you find yourself adding a seventh item, it usually means one of the first six is vague and should be rewritten rather than supplemented.

Any failed box means the trade is skipped and the reason is logged. Logging it matters: a record of temptations resisted is the only evidence you will ever have that the rule is working, because the alternative outcome is invisible. Pair the checklist with a defined daily loss limit so that the days you override it are still bounded.