#StaySAFU

The Boom-Bust Cycle in Trading

Many traders experience a cycle of making profits, only to lose them again, often due to behavioral patterns rather than strategy issues.

*Why This Cycle Occurs*

- Lack of a clear plan for managing wins

- Overtrading or chasing momentum

- Emotional reactions, such as euphoria, leading to impulsive decisions

- Failure to adjust risk management after wins

- Inability to walk away from profitable trades

*Breaking the Cycle*

1. *Create a Profit Lock Plan:* Define what actions to take once a certain profit level is reached.

2. *Set Trading Limits:* Establish a maximum number of trades per day or week.

3. *Journaling:* Record wins and subsequent actions to identify patterns.

4. *Withdraw Profits:* Regularly withdraw profits to protect capital.

5. *Define a Finish Line:* Determine when to stop trading, rather than trading simply because the market is open.

*Key Takeaways*

- Making profits is not the goal; keeping them is.

- Wins can become setups for failure if not managed properly.

- Each win is an opportunity to protect capital and build discipline.

*Conclusion*

Awareness is the first step to improving trading performance. By building a system that protects wins and managing behavior, traders can break the boom-bust cycle and achieve long-term success.