Adam762 Bailey

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What is revenge trading and how can it be avoided?

Revenge trading happens when traders increase size or abandon rules after a loss, trying to recover quickly. It stems from emotional frustration, not rational analysis. Institutions prevent revenge trading with limits—hitting a loss threshold forces traders to stop. Retail traders must create personal rules: walk away after two consecutive losses, reduce size after drawdowns, or set daily limits. Benefits of avoiding revenge trading: preserved capital and emotional stability. Risks: revenge trades often multiply losses and destroy accounts. The cure is acceptance—losses are part of the game. Revenge trading is emotional sabotage; discipline prevents it.