Green day, wrong reasons

[Shadow Trader]

The day finished up 1.2%. Great. Except three of the winning trades broke the rules, and one of them was a pure impulse with double size.

That day deserves a red mark in the journal, even with the green number next to it. Rule-breaking that pays is the most dangerous kind, because it teaches the brain that breaking rules works. A habit starts forming, quietly, and it gets reinforced every time the gamble lands.

Eventually the gamble fails, and it tends to fail at the worst time, with the biggest size, after the longest winning streak.

The fix is grading days on process before looking at profit. A simple two-column journal helps: "followed plan" and "result." The goal is a column of ticks on the first, not on the second.

Some traders colour-code journal days in three shades: green for good process and good result, yellow for good process and bad result, red for bad process, regardless of result. Over months, the yellow days are the ones to keep calm about, and the red days, even the profitable ones, are the ones to fix.

How are lucky wins handled in the journal, and has a rule-breaking winner ever turned into a costly habit?