10 Survival Rules and 2 Defense Frameworks For Online Trading

Drawdown Defense Protocol

1. The 3-Loss Circuit Breaker
   After 3 consecutive losses: Stop trading for the day or session.
   Prevents revenge trades and forces review.
2. Risk Compression on Streak
   After 2 losses: Reduce position size by 50%.
   Only restore full size after a +1R trade.
3. Streak-Based Trade Filtering
   Only take A+ setups (e.g., confirmed trap + momentum) during a losing streak.
   Eliminate “idea trades” — focus on only proven triggers.
4. The “Comeback is Capped” Rule
   During a drawdown comeback, only aim to recover 50% of losses per day.
   Keeps your expectations grounded, avoids chasing.
5. Drawdown Reflection Ritual
   After a losing day:
   Screenshot all trades.
   Write 1–2 sentences per trade: Was this truly in your playbook?
   Adjust next session risk if you broke structure.

This system is built to do two things:

• Keep your account alive.
• Keep your psychology clean.

Rules for Surviving Adverse Drawdowns & Losing Streaks

1. Drawdown Buffer Rule
   Never risk more than 50% of your “daily risk limit” after 2 consecutive losses — you’re no longer in discovery mode, you’re in preservation mode.
2. Damage Cap Rule
   Cap total daily loss at 2R or 3R max. Shut it down. The market isn’t broken — you might be.
3. Setup Purity Rule
   Only trade A+ setups during losing streaks. Drop B setups, skip C setups. This isn’t recovery — it’s realignment.
4. Mental Cooldown Rule
   After 3 red days in a row, mandatory trading pause for 1 full day. Journal, review, detach, reset. No revenge charts.
5. Recovery Trade Rule
   You don’t recover losses with one big trade — only with streaks of discipline. Scale in smaller after red days, not bigger.

Conclusion:

These rules make you emotion-proof in drawdowns —
Your goal is not to avoid red days — it’s to keep your account and your psychology alive long enough to see the next green run.

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