Happy Monday, traders…
Ben here.
The sting of a bad trade can hit hard. It’s natural to feel frustrated, maybe even a little embarrassed after an annoying loss…
But for many traders, those feelings quickly morph into something more dangerous: the urge to “get even.”
Enter revenge trading, a trader’s worst enemy…
Revenge trading doesn’t just hurt your account value — it messes with your mindset.
The tricky part about revenge trading is it feels deceptively rational in the heat of the moment. “I’ll make it back on the next one,” you tell yourself…
But those decisions are fueled by emotion, not battle-tested strategy. And when emotions drive your trades, it’s like throwing darts with a blindfold on.
Trust me, I’ve been there, and it never ends well.
But fortunately, there’s a light at the end of the tunnel for traders caught in the revenge trading trap.
By acknowledging the issue and understanding the underlying causes, you can break free from this self-destructive pattern of revenge and regain control of your trading once and for all…
The Problem with Revenge Trading
Revenge trading refers to the act of engaging in impulsive and high-risk trades immediately after taking a loss.
Instead of carefully analyzing market conditions and making well-informed decisions, revenge traders allow their emotions to dictate their actions.
They’re driven by a desire to recoup their losses quickly, often without a solid strategy or proper risk management…
One of the primary reasons revenge trading is so problematic is that it goes against the fundamental principles of successful trading.
Trading should be approached with a calm and rational mindset, backed by thorough research and analysis…
However, revenge trading throws all caution to the wind, leading to impulsive and reckless decisions founded in emotion (as opposed to logic and rationality)…
The Importance of Addressing the Issue
Revenge trading can have severe consequences on your financial well-being, mental health, and overall trading career.
By succumbing to the temptation of revenge, traders often find themselves caught in a vicious cycle of losses, with each impulsive trade further exacerbating their downswing.
Moreover, the emotional toll of revenge trading can lead to stress, anxiety, and a negative mindset — hindering your ability to make sound trading decisions in the future.
Remember: The market doesn’t owe you anything.
Let’s make sure this doesn’t happen to you…
5 Simple Ways to Overcome Revenge Trading
If you ever find yourself spiraling into a vicious cycle of revenge trading, consider taking one (or all) of the following steps:
Remove the Name from Your Watchlist
The easiest way to avoid revenge trading is to remove this name from your watchlist. Out of sight, out of mind.
Harness Your Emotional Discipline
Recognize that trading is inherently filled with both wins and losses. Take it from me: Last week, I had a 200% win and a 50% loss … on the same day. Them’s the brakes of trading. This is why it’s essential to cultivate emotional discipline and detach yourself from each individual trade’s outcome. Don’t be too results-oriented. Accept that losses are a part of the game and focus on your long-term vision.
Analyze (and Learn from) Your Mistakes
Instead of seeking revenge, use each loss as an opportunity for growth and learning. Analyze the factors that led to the loss, identify any mistakes made, and take them as valuable lessons for future trades.
Maintaining a trading journal can help you track and reflect on your performance.
Stick to Your Game Plan
A well-defined trading plan is a trader’s best defense against revenge trading. Set clear entry and exit points, establish risk-reward ratios, and stick to your rules no matter what.
Having a plan in place helps traders avoid impulsive decisions driven by emotions. If you truly stick to your game plan, revenge trading should be impossible.
Implement Proper Risk Management
Effective risk management is crucial to lessen the impact of potential losses. Set stop-loss orders to limit potential downside — and don’t move them lower. Avoid risking more than a predetermined % of your trading capital on a single trade, and NEVER go all-in on any one position.
The Truth About Revenge Trading
Revenge trading is a dangerous pitfall that can derail even the most promising trading careers.
Succumbing to emotions and seeking revenge after a loss only perpetuates a cycle of self-destruction.
So, whatever you do, remember this…
To succeed in the stock market and avoid revenge trading … you need to prioritize emotional discipline.
Learn from your mistakes, implement a well-defined trading plan with proper risk management strategies, and stop revenge trading for good.
Happy trading,
Ben Sturgill
P.S. Stop trading for revenge … and start trading with the Smart Money.
Join my buddy Danny Phee THIS WEDNESDAY, December 18 at 9 a.m. EST to see the biggest Smart Money bets of the week.
Click here to reserve your seat!
*Past performance does not indicate future results
