Celebrating tiny wins

[Shadow Trader]

A string of small winners brings a warm feeling. It's natural, and it quietly changes behavior.

After four wins in a row, confidence rises. Size creeps up a little. Standards for entries slip a bit, since the last four worked. The mind starts to treat the streak as skill when it may partly be a friendly market.

The danger isn't the confidence itself. It's the shift in discipline that comes with it. The fifth trade gets taken with less scrutiny than the first.

A streak and a skill look identical in a short sample. Only a larger sample separates them.

There's also a quiet change in what gets noticed. Winners get replayed mentally in detail, while the near-misses and lucky escapes fade away. After a hot hour, the memory says the strategy is perfect, even if two of the trades should have been losers and weren't.

Is the trade after a winning streak any different from the trade after a loss?