Your own head: FOMO, revenge trading and the journal
The emotions that wreck accounts, the circuit breakers that stop them, and the journal that shows what really makes or loses you money.
Words in this lesson
Most trading losses don't come from a bad chart. They come from a person making a choice they had already promised not to make. Memecoins seem built to trigger it: everything is fast, loud, green or red, and open all night.
The four traps
- FOMO, the fear of missing out. You buy because it is moving and everyone is talking about it, not because it passed your checks.
- Revenge trading. You just lost, so you buy the next thing, bigger, to win it back. The loss picks your next trade, not your plan.
- Tilt. After a few losses, or one big win, you stop following your rules at all. Everything feels urgent.
- Overtrading. Thirty trades a day because sitting still feels like losing. Each one pays fees, and most are worse than your best five.
There is a reason these feel so strong. In their work on prospect theory, Daniel Kahneman and Amos Tversky found that people feel a loss roughly twice as strongly as a gain of the same size. Losing 1 SOL hurts more than winning 1 SOL feels good, so the urge to erase it right now is powerful. Knowing this won't make you immune. Rules set in advance help.
Circuit breakers
- A daily loss limit. When you are down a set amount today, you stop until tomorrow. No exceptions.
- A cool-down. After two losses in a row, step away for 30 minutes.
- A trade cap. A most-trades-per-day number you don't cross.
- No trading when tired, drunk, angry or celebrating.
Set these while you are calm, the way a pilot runs a checklist before take-off and not in the middle of a storm. In Trenchpilot, the daily loss limit stops your bots buying for the rest of the day, and its card shows how far down you are today against the limit. A bot can't get angry, but the person changing its settings can, so the limit is there for you too.
The trading journal
A trading journal is a record of every trade: what you did, why, and what happened. It is the most honest coach you will ever have. Your memory keeps the big wins and quietly forgets the twenty small losses.
| Coin | Why I bought | How I sold | Result after fees | Rules followed? |
|---|---|---|---|---|
| Coin A | Fits today's meta, holders spread out | Initials at 2x, trailed the rest | +0.42 SOL | Yes |
| Coin B | Saw it pumping in a chat | Panic sold, no stop | -0.31 SOL | No: chased |
| Coin C | Bought right after Coin B to win it back | Stop-loss hit | -0.24 SOL | No: revenge trade |
What two weeks of journal reveal (made-up numbers)
A trader logs 30 trades in two weeks and ends down 0.7 SOL. Sorting the journal by the last column tells the real story.
- Step 1: 20 trades followed the written rules: 7 wins, 13 losses, net +0.9 SOL.
- Step 2: 10 trades were placed within 15 minutes of a loss: 2 wins, 8 losses, net -1.6 SOL.
- Step 3: The strategy was working. The revenge trades turned a winning fortnight into a losing one.
- Step 4: The fix is not a new strategy. It is a 30 minute cool-down after a loss.
The numbers your journal gives you
After 30 or more trades your journal can answer the questions that matter. Win rate is the share of trades that made money. On its own it says very little. What counts is the win rate together with the size of your wins and losses. Traders call this expectancy: win rate times average win, minus loss rate times average loss.
Same win rate, opposite results (made-up numbers)
Two traders both win 35% of their trades and both lose 30% on an average loser.
- Step 1: Trader one wins +80% on an average winner: 0.35 × 80 minus 0.65 × 30 is +8.5% per trade, before fees.
- Step 2: Trader two wins +40% on an average winner: 0.35 × 40 minus 0.65 × 30 is -5.5% per trade.
- Step 3: Take off about 3% a trade for fees. Trader one makes about 5.5% a trade on average. Trader two loses about 8.5%.
Most trading apps and bots keep part of this for you, such as a list of every buy and sell. What no tool can log is why you made the trade and how you felt. Write that part down yourself.
Check what you learned
0 of 5 answered
Finished reading? Tick it off and your progress is kept in this browser.
This guide is for learning. It is not financial advice. Most memecoins go to zero and most people who trade them lose money. Only ever trade what you can afford to lose.