Lesson 3 of 6 · Trading Psychology
Revenge trading
Revenge trading is trying to win back what the market took.
Revenge trading looks like this: you take a loss, feel frustrated, and immediately enter a bigger trade to make it back. The market has no memory of what it took from you. You are trading emotion, not a setup.
Doubling size after a loss deepens the hole.
A 20% drawdown needs a 25% gain to recover. If you double position size after a loss and lose again, you could be down 40%, which needs a 67% gain. The recovery math punishes impatience harder than the original loss did.
This one is an animated diagram in the app. See it in Vero.
The pattern is predictable.
Loss, then a bigger position, then usually a bigger loss. The second trade is worse because you entered fast, skipped your rules, and sized up on emotion. Build a hard rule: after two losses in one session, stop trading for the day. Come back when you are following your process, not chasing it.
You just had two losses in a row and feel the urge to trade immediately. The best move is:
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A. Take a break and only return when you are following your process. The emotional state after consecutive losses is a poor environment for decisions. A mandatory pause resets that.