The trade count creeps up the day after a red one
By Axelrod
A trader has a red Monday. On Tuesday he takes eight trades. On an ordinary day he takes five.
Ask him about Tuesday and every trade has a reason. The setups were on the screen and he took them. He does not think of himself as someone who trades a loss back, and judged one trade at a time he is right.
The count is the only place it shows, and almost nobody counts.
Why the day after hides it
A loss at ten in the morning has a long afternoon to make itself felt. By the next morning it has been filed. The platform opens clean, the day’s P&L reads zero and the chart holds no grudge.
So nothing feels different. The eighth trade of the day does not feel like the eighth. It feels like the next setup. The rise is also small. Three extra trades is not a blow-up and nobody posts a screenshot of it. It looks like a busy day, and busy days come with explanations.
The count
Your log has trades per day, or you can get it in a minute. Add two columns. The first is the result of the day, green or red by net P&L. The second is yesterday’s result, which is the previous row’s first column copied down one line.
Split the days into two piles by that second column: days after a red day, and days after a green day. Take the average number of trades per day in each pile. Divide the first by the second.
A result of 1.0 means the day after a loss looks like any other day. Above 1.0, you trade more. The first day in the log has no yesterday, so it sits out.
A worked log
Take 21 made-up days and 120 trades. Six of the days were red. Twenty days have a day before them, so twenty go into the piles.
Six days came after a red day. They held 8, 9, 7, 8, 7 and 10 trades, which is 49 trades and a mean of 8.17. The other fourteen came after a green day. They held 66 trades between them, a mean of 4.71.
8.17 divided by 4.71 is 1.73. The medians say the same thing, 8 against 5.
The lime bars are the days after a red day. None of them is a wild day. The highest is ten, and no day in the log reached eleven.
Is it just that red days are busy
Rule that out first. A busy day can be red because it was busy, and the day after it can be busy because the market stayed busy.
Look at the red days themselves. In the worked log the six red days averaged 5.67 trades, close to an ordinary day. The red days were not the busy ones. The days after them were.
You can also price the gap. At the 4.71 baseline, the six days after a red day should have held 28.3 trades. They held 49, so 20.7 trades were extra, which is 17 percent of everything in the log. Those are the trades to open.
What it does not prove
Six days is a small pile, and one news day can lift it. How many trades before your numbers mean anything is the honest account of how little six days can say. Treat 1.73 as a place to look.
It does not say why. A plan can call for more trades the day after a loss, if the strategy has a second setup that only shows up then. The number has to be read against the plan you wrote.
It is also a different check from the same-day one. Revenge trading is a number before it is a feeling compares sessions that began with a loss. This count follows the loss across the night, so it can catch a trader who passes the same-day test and trades harder the next morning.
What to do with it
Do not set a target for the ratio. Open the extra trades.
Take one day after a red day and mark each trade planned or unplanned. Planned means the setup was on your list before the session opened. In the worked log the third day held eight trades and five were planned. The three that were not are the finding.
Then write the cap the evening before, at the close of a red day, while the loss is still a number and not yet a mood. Your usual count is the cap. The rules you write on Sunday and the person who breaks them on Wednesday is about why a rule written then outlasts one written at the desk.
Find yours this afternoon
Take your last twenty trading days. Write trades per day, write green or red, and copy the result down one row. Two piles, two averages, one division.
If the answer sits near 1.0, the day after a loss is a normal day in your log and you can stop wondering about it. If it sits well above, you have found where the count goes after a loss. It was in the log the whole time, and every trade in it was defensible, which is how it stayed there.