MENTAL MODEL · M12936

Crocodile Principle

BusinessHigh supportManagement

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Updated 2026-09-10

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INTRODUCTION

English translation pending.

CORE DEFINITION

The crocodile principle is a stop-loss metaphor from investing and risk management: if a crocodile seizes your foot, struggling only makes it bite down harder, and the sole chance of survival is to sacrifice the limb rather than lose the body. Its scaffold is decisive stop-loss: sunk cost is not grounds for continued investment, and timely cutting prevents the loss from expanding.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

- Pre-set the stop-loss: fix the exit condition before the position is entered, never after. - Execute on contact: when the line is touched, act rather than wait for it to recover. - Ban the average-down: refuse the reflex to add capital in order to lower the cost basis.

anchor

Anchor fast decisions

The asymmetry is in how losses compound: pulling away from the crocodile increases the injury, so the instinct to escape is itself the mechanism of ruin. Adding capital to a losing position works the same way, converting a bounded loss into an unbounded one. Stop-loss survives by accepting the fixed amputation now and preserving the capital that still has a future.

MINIMUM ACTION

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Practice this model in one real situation:

Write down the stop-loss line at the same time you open the position or start the project. 2. When the line is touched, execute the exit without renegotiating the terms. 3. Watch for the averaging-down reflex and label it explicitly when it appears. 4. Treat stop-loss as discipline, not as an admission of defeat.

Check to track your progress (stored locally)

Learning progress0%

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Source support: Explicit

link
wiki.mbalib.comhttps://wiki.mbalib.com/wiki/%E9%B3%84%E9%B1%BC%E6%B3%95%E5%88%99ZH · Explicit
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