What revenge trading is
Revenge trading is taking a larger or more hasty position right after a loss, aiming to make it back quickly. It starts not from logical judgment but from an emotional reaction to the loss itself.
Why the urge happens
- Loss aversion — people feel the pain of a loss far more intensely than the pleasure of an equivalent gain
- Loss of control — a loss can feel like "my fault," triggering a need to immediately regain a sense of control
- Sunk cost bias — fixation on money already lost drives irrationally larger risk-taking
What it typically looks like
Using higher leverage than usual right after a loss, entering without respecting your stop-loss rules, or picking an asset/timing unrelated to your actual strategy — any one of these is a strong sign of revenge trading.
How to stop it
- Set a daily loss limit, and once it’s hit, stop trading for the day, no exceptions
- Enforce a mandatory pause — even just a few minutes, or one candle — right after a loss before taking any action
- In your journal, honestly check whether this trade was an attempt to make back the previous loss
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