Lesson 3 – Revenge Trading

Problem

You lose money on a trade. Your chest tightens, anger rises: “I’ll get it back now!”
You double your position size, ignore your rules, and force a trade.
A few hours later, your account is down even more.

This is revenge trading – trading from anger, not logic.

Cause of the Problem

• Ego defense: Losses feel like a personal attack.
• Need for control: Trying to “fix” the market by forcing a win.
• Financial pressure: Believing you can “recover” instantly by increasing size.

How the Brain Works

• Losses trigger the same brain areas as physical pain.
• The fight-or-flight response kicks in, creating a survival instinct to strike back.
• The dopamine system tempts you: recovering quickly would feel euphoric, so your brain pushes you to risk more.

Real-Life Example

Jonas loses €150 on EUR/USD. Furious, he thinks: “The market can’t beat me!” He doubles his lot size and enters again without analysis. The market goes the other way – another €300 gone.
Now his account is down €450 – not because of strategy, but because of emotions.

Practical Solutions

1. The 2-Loss Rule
   • After two consecutive losses, stop trading for the day.
   • This creates a hard boundary against emotional spirals.
2. Emotional Reset Routine
   • After a loss, step away from the screen: walk, stretch, breathe.
   • Never enter the next trade within 15 minutes.
3. Detach Ego From Results
   • Write down: “A loss is feedback, not an attack.”
   • Review journal: Was it a good trade that lost, or a bad trade?
4. Predefine Daily Loss Limit
   • Example: Max -2% per day.
   • If reached → platform closed. No exceptions.

✅ Key Takeaway: Revenge trading turns small losses into disasters. The strongest traders are not the ones who win the fastest – but the ones who know when to stop.