Elijah R_ Perez

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What is revenge trading and why is it destructive?

Revenge trading happens when traders increase risk or abandon strategy after losses, trying to “win back” quickly. In forex, this often leads to spiraling losses, blown accounts, and psychological burnout. Example: after losing 3% on EUR/USD, a trader doubles size on the next trade, ignoring risk rules. Institutions prevent revenge trading with daily/weekly loss limits and supervisory oversight. Retail traders must self-impose rules: cooling-off periods, journaling emotions, and limiting position size after drawdowns. Risks: capital destruction, emotional trauma, and addiction. Revenge trading embodies the danger of emotional decision-making—survival requires patience, not vengeance.