Revenge Trading: Adding Salt to the Wound

EnclaveFX Ltd
Jan 31, 2023

Forex traders aim to maximize their financial security when  trading with the forex market. Traders never think about losing money or incurring a high debt. The market is unpredictable and volatile; a trader cannot predict what will happen. As a result, traders suffer significant losses that sting them too much for their good and lose sight of how to trade strategically.

This article aims to define revenge trading and explain why it is avoided.

What is Revenge Trading?

Revenge trading occurs when a trader makes a significant loss; instead of revising their existing strategy, they keep trading to recover those losses. This results in even more significant losses. In revenge trading, traders lose a substantial amount of their money during trading. It is a reasonable time to learn how to control revenge trading if revenge trading is implemented.

Identify the Triggers of Revenge Trading

Traders are preparing to make a big trade; there may be "trading triggers" for the trader personally. If traders can identify the warning signs, they can avoid revenge trades.

Traders who traded in the 100+ pips range failed to book their profits because they expected the price to increase. However, it turns its head around and comes to its entry point. Unrealized gains are lost. Rather than focusing on unrealized gains, traders tend to emphasize the improvements.

Identify the Root Cause for your Failure

What did you Miss?

Traders learn from their mistakes and keep their concepts simple. By analyzing the data, try to understand what happened to the trading losses. Consider: "Why did the trader lose the trade"? "What could traders have done to prevent it"? "Is there anything lacking in trade"?

To practice forex trading online, open a demo account with the  best forex trading online brokers, where virtual funds are traded while real-time information is provided. By doing so, traders are preventing the risk of putting their capital at risk until they are ready to put their strategies to the test.

  • Did You Follow the Pre-Trade Routines?

To start a trading system, traders must follow the forex pre-trading routine. Keep up-to-date with both fundamentals and techniques that affect forex trading. It helps bring about a qualitative change in trading. Make sure to assess trading methodologies to root out revenge trading.

Test Your Strategy

It is essential to keep strategy in mind if traders need help with a problem since successful strategies are hard to find. Traders do not want to start looking for a completely different method once their account is already in disarray. A new approach always comes with risks, and emotions can trigger revenge trading when things do not work out.

Revisit Your Risk management

Make sure traders revisit their risk management techniques. Traders always look for stocks that can move 50–100% or more.

Traders' first mistake is to trade without a trading system. Traders can determine if the system works by looking at basic questions like has it worked for me in the past? Have I won a lot of money using it? Would it have changed the outcome if you'd followed the strategy wholly? Would staying with it have been better?

Revenge Trading Risk Management

Many traders are tired of hearing that Risk Management separates the best traders from the rest. Even if an upturn looms, top professional traders know when to exit a trade.

By strictly following the Risk Management strategy, traders will avoid huge losses by avoiding revenge trading. Knowing when to continue and when to pull out is the best way to prevent revenge trading. It is possible to maximize the chance of winning while reducing the chances of losing by implementing proper Risk Management.

Personal Life can Trigger Revenge Trading Too

There is no reason to take losses personally, and traders should not blame the markets. There are many trading articles on "trading discipline" because maintaining control is essential to effective trading strategies.

When traders are frustrated, fuel their stress levels, and lose track of reality, trading is inappropriate in such situations. Take a break and resolve the problems because traders need a clear mind to be agile in their trading corridor. Plan the strengths and avoid revenge trading.


To succeed in the market, traders need a steady head and a relaxed mind. Traders are more likely to resort to revenge trading following a significant loss or losing streak, which leads them to increase their position size and the trades they take. It is one of the most common and devastating behaviors that traders can experience. Traders can avoid damaging their accounts and improve their trading performance.