What is Revenge Trading?
Quick Answer: Revenge trading is the emotional urge to win back recent losses by breaking your plan, overtrading, or increasing size. It destroys discipline and often turns a manageable drawdown into a catastrophic loss.
What is Revenge Trading?
Revenge trading is the act of entering a new trade immediately after a losing trade, without a valid setup, in an emotional attempt to "win back" lost money. This destructive behavior almost always leads to further losses and is a leading cause of blown trading accounts.
Warning Signs
- Immediate re-entry: Entering new trade within minutes of a loss
- Larger position size: Doubling down to recover faster
- No setup: Trading without meeting your strategy criteria
- Emotional state: Anger, frustration, desperation
- Abandoning stops: Removing risk management
Critical Rule
After any loss, take a mandatory 15-30 minute break away from charts. If you lost 2+ trades in a row, stop trading for the day. Emotional trading destroys accounts faster than any strategy flaw.
Prevention Strategies
- Pre-define breaks: Mandatory pause after losses
- Daily loss limit: Stop trading at -2% or -3% for the day
- Journal emotions: Write down feelings before next trade
- Discipline over profits: Following rules matters more than recovering losses
Related Terms
Learn More About Forex Trading
Now that you understand revenge trading, explore our comprehensive guides: