What Is Revenge Trading?
💡 Definition
Revenge trading is the impulse to take rapid, emotional trades (often oversized or low-quality) after a loss in an effort to “win it back.” It abandons plan, inflates risk, and typically deepens drawdowns.
Losses are tuition, not injustice to avenge. The fix is process, not payback.
Visual Overview
The Revenge Loop • Oversized Re-Entry • Loss-Limit Guardrails
Break the loop with hard loss limits and a reset protocol. No “make-it-back” trades — only plan-qualified setups at normal size.
Common Triggers & Warning Signs
🔥 Anger / Injustice
Personalizing losses; urge to “show the market”.
⏱️ Urgency
Feeling time pressure to recover PnL quickly.
📉 Loss Streak
3+ losers → rising tilt risk and criteria drift.
📣 External Triggers
Chat/FOMO, missed move, news spike after a stop-out.
🧠 Cognitive Dissonance
Ignoring stats/journal to justify immediate re-entries.
Why Revenge Trading Destroys Edge
- Oversizing: Doubles risk at lowest emotional control point.
- Rule Breaks: Entries without checklist/confluence slash expectancy.
- Variance Spike: Equity volatility jumps; drawdowns deepen and lengthen.
- Psych Spiral: Loss → anger → impulse → larger loss → more anger.
Anti-Revenge Playbook
Immediate Protocol
1) Hit hard limits: stop for day at −2R; week at −5R.
2) Reset ritual (5–10 min): stand up, water, 30 deep breaths, quick walk.
3) Journal micro-postmortem: What failed? (setup, execution, randomness). Write 3 bullet fixes.
4) Size lock: next session capped at baseline r% (or −50%) until +N planned trades logged.
5) A-Setup whitelist only: require RRR≥1:2, trend alignment, level + trigger. No exceptions.
Tools that Prevent Revenge Trades
🧭 Pre-Trade Checklist
Binary yes/no for trend, level, trigger, volatility fit, risk, RRR. If any “no” → no trade.
⏱️ Cool-Down Timer
Mandatory 15–30 min wait after a stop-out before next decision.
🔕 Hide PnL Intraday
Show only risk & R-multiples; reduce tilt triggers.
📈 Stats Dashboard
Track Net R by session and “planned vs impulse” rate. Post on screen.
🚫 One-Click Lockouts
Broker limits for max daily trades/loss. When tripped, platform blocks new orders.
Metrics to Detect Revenge Trading
= Impulse Trades / Total (target ≤ 10–20%)= Avg minutes between stop & next trade (increase it)Avg R of trades after a loss (should ≈ overall)# trades with size > baseline r% (should be 0)# of −2R day / −5R week triggers (drive toward 0)Common Mistakes
⚠️ Avoid These Errors
- Doubling size right after a stop-out.
- Trading immediately on the same symbol to “show it”.
- Deleting rules mid-session because of one loss.
- Staring at PnL instead of trade plan and levels.
- Skipping the journal on bad days (the most valuable data).
Advanced Safeguards
🧊 Equity-Band Throttle
At −6% from peak: halve r% and max trades/day until back above −2%.
🤝 Accountability Partner
Share end-day journal/screenshots; outside eyes reduce rule-breaking.
🔗 Pre-Commit Contract
Signed rule sheet; breaking it triggers mandatory day off and review.
🧘 Mindfulness Drill
Box-breathing 4-4-4-4 for 3 minutes before any re-entry decision.
The Bottom Line
Revenge trading is an emotional reflex that magnifies losses. Replace it with rules: hard loss limits, cool-downs, A-setup checklists, and size locks. Trade the plan, not the pain — and let consistency repair the equity curve.