One of the primary reasons why traders struggle to succeed in their endeavours is because they engage in revenge trading. According to some decades of experienced investing consultants, vengeance or revenge trading is a “destructive and foolhardy approach to invest in your trading or waste your hard-to-earn money.”

Since revenge trading is one of the most prevalent trading blunders, the vast majority of traders have, at one point or another throughout their trading careers, given in to the temptation to engage in it. However, many traders may deny ever having done so.

I am aware that this somehow may cause you to wince, but I encourage you to have a glimpse in your trade journal at the trade that was the most humiliating for you.

The trade setting that you noticed is worth revisiting. Review your transaction and ask yourself: Why on earth did I ever accept that deal? “What the hell was I doing?” How could I?

And the most pressing question, what the hell was I thinking?

Most likely, a known arrangement led to you making the deal instantly without much rational thought.

Your choice was based on your interpretation, not the market. Not all of the worst trades you’ve ever undertaken have to be those that cost you more than any other.

Choosing not to execute a deal that may have been your best of the year or locking in gains too early can be a squandered opportunity that could have cost you thousands of bucks. Even if the markets were screaming for you to choose this next transaction, you might have backed down out of a sense of failing.

In some instances, it may turn out that your worst trade was done when you were so apathetic about losing that you mindlessly grabbed one after the next in an attempt to compensate for the defeats you had already incurred.

In this scenario, you never wavered from your conviction that you were in the right, and you were confident that you would ultimately achieve success despite the presence of rivalry. Consider that trading with the intention of exacting retribution may quickly become a damaging habit that, if not addressed, can lead to significant pullbacks.

So, let’s stumbled upon what revenge trading is and what’s underlying that it causes lots of restlessness even among seasoned traders.

What does it mean when people speak openly about “vengeance trading”?

In the wake of a devastating loss, traders often resort to “revenge trading” as a ritual of getting back their momentum in the market. In the immediate aftermath of a substantial defeat, they make a new trade without having the opportunity to ponder their approach at least.

Getting back on your grounds after suffering a loss as soon as possible is the intention. By entering into yet another transaction, which is anticipated to be profitable, the damages may be swiftly recouped, according to the logic that underpins this strategy.

You are mindful, however, that it is impossible to forecast market dynamics accurately. When everything is said and done, the winning deal would most likely rotate on a loss. It’s just more significant than what the trader is seeking to recuperate at the moment. The majority, probably, traders that engage in revenge trading had been on a winning streak until they suffered a significant setback, which caused them to reevaluate their strategy.

The act of forcing a deal in an exertion to avenge a loss. It results from resentment since the trader is enraged that they have suffered a gigantic loss and has a solid anxiousness to recoup the money for the sake of the next trade.

What are the motivations underlying vengeance trading, and why do traders engage in such drastic behaviour and attitude? 

This illogical behaviour must have been influenced by a mob of feelings, including outrage, nervousness, embarrassment, and covetousness, some that at least one trader must have experienced at some point throughout their career. It isn’t only for newbies; experienced traders can also use it; nonetheless, they are susceptible to falling prey to this approach.

Because of this, vengeance trading is much more illogical than it already was.

Seemingly, revenge trading has a devastating effect on traders of all proficiency levels. Most of the time, traders that indulge in this will attempt to increase their trading position by a factor of two or three in the expectation that the subsequent deal would be promising.

Rage and a desire for market domination 

After suffering a significant financial setback, a trader may instantaneously and unquestioningly join a new trade, with hatred (against the financial markets) and greed serving as the primary motivating factors behind their choice. But, in reality, they are more likely to lose a lot more money than they usually earn.

The emotions of dread and humiliation

Sometimes traders have such a strong aversion to acknowledging and respecting a loss, especially a significant one, that they immediately engage in a transaction designed to exact vengeance on the market. Ofcourse, it sounds enticing but for how long you will pursue this risky pastime.

The desire to maintain one’s decent professional reputation as a skilled trader who is victorious in most of their transactions is a powerful motivator for countless traders, especially unless they have a history of being fortunate in most of their transactions.

Simply shrugging one’s shoulders and moving on is the typical reaction to unfavourable trade dealings.

However, this is insufficient! You need to go extensively into the issue at hand and carefully examine the specifics of the transactions that went wrong.

Failure to learn from your errors might lead to a cycle of re-incurring flops. You have no choice but to push yourself to access your trading notebook (for the nitty-gritties) and ask yourself questions, no matter how unpleasant or disheartening it may be.

By identifying your emotional responses while making terrible trading choices, you may be able to spot a declining relationship and rectify it. Of course, you can encounter difficulties in considering changing lousy trading habits and behaviours; however, it will undeniably assist you in establishing emotional responsibility for making progress as a trader.

How do I look at this?

Setting some concrete criteria that you will steadfastly adhere to is, in my view, the most straightforward approach to prevent being a victim of revenge trading, thus eliminating any room for uncertainty.

Place a stop-loss order shortly after making a transaction. Stop-loss orders should be used instead of your self-effort to limit your losses. Unfortunately, too many individuals still subscribe to the obsolete school of thought that maintains that if a market goes down, it will ultimately have to rebound again.

Consequently, they cling to a stock whose price declines inexorably over time.

You will keep your losses to a minimum thanks to a stop-loss order, which averts the occurrence of the scenario mentioned above and authorises you to channel your capital into investments that are more likely to provide positive returns than negative ones.

Bonus (Tip) (In business, there’s no place for emotions)

If you are involved in a transaction that isn’t going in your favour, Cease! Remember that the Forex market and another outstanding stock choice will be there the next trading day.

Whenever you make another poor investment decision, it is crucial to first reflect on the circumstances that led to the failure of your previous stock selection and to draw the appropriate conclusions.

Never give in to the feeling that you need to make a stock transaction immediately because your instincts brought it on.

One of the most essential things to remember while trading is that not all of the stocks you prefer will turn out to be profitable investments. The best approach is to establish self-control over your feelings, cut your losses with those who aren’t worth keeping, and then go on without looking back with any feelings of remorse.

One last piece of advice is to take things slowly and give the actions you’re undertaking the importance they deserve. You really ought to work for something. Investing should lead to higher profitability, not derail them. Look for someone who understands and may be able to verify your story.

Attempting to “rectify” a trade that didn’t go as planned is a foundation of human psychology.

Regardless of how you’re feeling about your recent trading results, the market has no interest in it.

However, if you trade impulsively or frantically, it will bitterly swipe your money and augment emotion.