Just made a profit and then doubled the next one—the risk changes too
Trigger scenario: Suppose the account already has 1000 USDT. In the first trade, you only use 100 USDT. After selling, you earn 20 USDT. You think this 20 USDT can serve as a cushion, so for the next trade you immediately use 200 USDT. The amount here is an assumption, not a position recommendation.
Wrong decision: Treat the profit from the previous trade as a buffer for the next one. Assume the price drops 15% on the second trade. With 200 USDT, the unrealized loss is 30 USDT. If you instead still invest 100 USDT, the same percentage drop would result in only a 15 USDT loss. The 20 USDT profit from the first trade does not change the amount invested or the volatility amount of this second order. After losing 30 USDT on the second trade, the account total would fall from 1020 USDT to 990 USDT—meaning even the original 1000 USDT has decreased by 10 USDT, not counting fees.
Change what to do: Before placing the order, write separately: “the previous trade’s net profit,” “this trade’s amount,” and “how much the loss would be reduced for a given percentage price drop.” First calculate 200 × 15% = 30, then compare it to the pre-written tolerance range. If you’re only doubling the amount just because you just turned a profit, but there are no new rules to support it, don’t place the order yet.
Trigger scenario: Suppose the account already has 1000 USDT. In the first trade, you only use 100 USDT. After selling, you earn 20 USDT. You think this 20 USDT can serve as a cushion, so for the next trade you immediately use 200 USDT. The amount here is an assumption, not a position recommendation.
Wrong decision: Treat the profit from the previous trade as a buffer for the next one. Assume the price drops 15% on the second trade. With 200 USDT, the unrealized loss is 30 USDT. If you instead still invest 100 USDT, the same percentage drop would result in only a 15 USDT loss. The 20 USDT profit from the first trade does not change the amount invested or the volatility amount of this second order. After losing 30 USDT on the second trade, the account total would fall from 1020 USDT to 990 USDT—meaning even the original 1000 USDT has decreased by 10 USDT, not counting fees.
Change what to do: Before placing the order, write separately: “the previous trade’s net profit,” “this trade’s amount,” and “how much the loss would be reduced for a given percentage price drop.” First calculate 200 × 15% = 30, then compare it to the pre-written tolerance range. If you’re only doubling the amount just because you just turned a profit, but there are no new rules to support it, don’t place the order yet.