Revenge Trading

Create a post-loss reset before taking another position.

Key idea

Revenge trading is taking a lower-quality, often oversized trade immediately after a loss in an attempt to 'get the money back.' It replaces process with emotion at exactly the moment your judgment is most impaired, and it's one of the fastest routes to turning a normal loss into a severe drawdown.

How to apply it

Build a mandatory pause after any loss — a fixed number of minutes, or a short walk away from the screen, before the next entry.
During the pause, re-check whether the next setup meets your normal written criteria, or whether you're only taking it to recover the last loss.
If sizing feels like it's crept up right after a loss, treat that as a signal to stop and reassess, not to keep going.
Log the loss and the trade that followed it in your journal to spot the pattern over time.

Example

After a stop-out, a trader immediately doubles their normal size on the next ticker that moves, without checking it against their entry rules. A mandatory 15-minute pause and a fresh checklist review would have caught that this second trade doesn't actually qualify.

Checklist

I have a mandatory pause rule after taking a loss
I re-checked the next setup against my normal criteria, not just 'need a win'
My position size after a loss is normal, not increased
I logged both the loss and the following trade in my journal

Common mistakes

Entering a new trade immediately after a loss with no pause
Increasing size to try to recover a previous loss faster
Skipping normal entry criteria because 'this one has to work'
Not tracking the pattern of post-loss trades over time