Unit 1 · Level 1 · The four demons, up close
Greed: the doubling-down spiral
Greed, in trading, is mostly a refusal to accept a small loss. In 1995, trader Nick Leeson kept doubling down to hide losses in a secret account. The hole grew to £827 million and sank Barings, a 233-year-old bank that had financed the Napoleonic wars. The spiral fits on a napkin: lose, double, lose, double, gone.
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What you get asked
Order the doubling-down spiral
Notice the shift in step 4: the goal quietly changes from making money to not being wrong. That's when the spiral takes the wheel.
Why does the double-after-every-loss strategy (the 'martingale') eventually destroy accounts?
Start by risking €100 and after six straight losses the next double is €6,400, and six-loss streaks happen constantly. The math only 'works' with infinite money, which nobody has.
Trying to win back a loss immediately, at bigger size, is called ___ trading.
The Trading course lists revenge trading as a demon of its own. Here you can see it's greed wearing pain as a mask.
You're deep underwater with no stop, adding more because you're 'about to be right'. Greed's favourite disguise here is:
Real conviction comes with a thesis, a size limit, and an exit. If it's just a feeling that grows with the loss, that's the demon talking.
A trade hits your planned stop for a normal, planned-size loss. The greed-proof response?
Planned losses are tuition; unplanned doubles are the spiral. Leeson's first hidden loss was small too. 🐜
The rest of this unit
FOMO, fear, greed, hope: meet the voices that trade your money for you.