I've seen this in myself and in many traders too. After a loss, we suddenly become very cautious. We double-check everything when opening the chart, remember our rules, avoid unnecessary entries, and tell ourselves, "This time, I won't make a mistake."

But then what happens?

Two or three trades go our way, our confidence returns, and the very rules we held onto so firmly after a loss gradually start to seem unnecessary. Then we start telling ourselves, “This trade is different,” “We can bend the rules a little here,” “The market’s direction is so clear—what’s the problem with taking a risk?”

And that’s often where the problem starts all over again.

Discipline doesn’t mean following your rules after a loss. True discipline means not feeling so invincible after three winning trades in a row that you break the rules you set for yourself. It’s easy to recover after a loss because the loss is reminding you of reality. The hard part is when you feel like you understand the market now, your next trade is bound to work, and you can afford to bend your rules a little.

Consistency in trading doesn’t mean having one good trading day. True consistency means sticking to your process even when your confidence is tempting you to break the rules.

Maybe that’s why some traders don’t lose because of a loss, but instead lose their discipline after a winning streak and end up losing again.