Small winners and big losers feel different, and the mind doesn't treat them equally

[Shadow Trader]

A series of five trades: plus two pips, plus three, plus two, plus three, minus fourteen. The net is minus four. On paper, it's a slightly losing run. In memory, it feels like a disaster, because the loss is vivid and the wins are blurry.

Loss aversion research says a loss feels roughly twice as strong as a gain of the same size. Scalping stacks the deck against this, because the frequency of small wins builds a sense of safety and the occasional large loss feels like a betrayal.

Two common reactions follow.

The first is tightening stops after a big loss, which raises the number of small losses and quietly changes the strategy.

The second is widening them after a run of small wins, which invites the very large loss that caused trouble before.

Both are emotional adjustments dressed up as strategy updates.

A fairer view comes from looking at the distribution of results over a few hundred trades. How many trades were wins, how large was the average winner, how large was the average loser, and how often did the biggest losses occur? Written out as numbers, the feeling shrinks to its real size.

Has tracking the distribution of results changed how a rough patch is viewed?