Why the trade right after a big win is usually the worst one

[Fairman]

Why the trade right after a big win is usually the worst one

A big winner produces a rush that bends judgment. Confidence climbs, risk perception drops, and the next setup gets less scrutiny. Size creeps up, filters loosen, and the trade taken in this state tends to be lower quality than average.

It is easy to confirm in the data. Sort trades by the result of the preceding trade, and compare expectancy after a large win with expectancy after a normal outcome. Many traders see a clear dip.

The reverse also happens after a big loss, but that effect gets more attention. The post-win slump is harder to notice because the account is up and nothing feels wrong.

A practical countermeasure is a short forced pause after any trade above a certain size, either way. One or two minutes away from the screen, a glass of water, and a re-read of the rules before the next entry.

Another is a rule that the next trade after a big win must be at standard size, no exceptions.

Has the post-win trade been analyzed separately in your journal?