Part 2 · Set up and apply the rules

07A valid setup can still lose

Following every rule does not prevent a loss.

Each candle = 1 hour | Gold line = illustrative SMA50. Hypothetical illustration, not real market data.

The buy stop at 1.1203 triggers, but the move fails and price falls to the stop at 1.1173. With an exact stop fill, the loss is 30 pips.

Record the loss, check the fill and follow the daily limit. Do not widen the stop, double the next order or assume the next breakout must succeed.

A winning trade taken outside the rules is still a process error. A losing trade taken within them is evidence for your review.

Honest note

A collection of rule-following losses may mean the method has no useful edge. That is a valid finding, not a personal failure.

Key takeaway

Ask: did the strategy fail, or did I fail to follow it? They need different responses.

Try it

Add a "Rules followed? yes/no" column to every journal entry, separate from the result.

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