What It Is
Revenge trading is the act of placing trades primarily to recover a recent loss — not because the setup is valid.
Why It Happens
- Pain of loss > pleasure of gain (loss aversion)
- Identity attachment to results
- Impatience with the recovery arc
The Loop
Loss → anger → oversize → bigger loss → anger → oversize → account damage.
Breaking the Loop
- **Daily loss limit**: hard stop at −X% of the account
- **Cool-down rule**: no trading for 15 minutes after a loss
- **Journal the emotion**: writing it defuses it
- **Reset routine**: walk, water, breath
Key Takeaways
- Revenge trading is the fastest way to blow an account.
- Hard rules and cool-downs are more effective than willpower.
- A single day's loss is recoverable; a blown account is often not.