What Is Revenge Trading?

Revenge trading occurs when you take trades primarily because you’re trying to recover a previous loss.

Example:

Trade 1:

-£100.

You become frustrated.

Trade 2:

-£250.

Now you desperately want to recover £350.

You increase your position.

Trade 3:

-£500.

The problem has now become much larger than the original loss.

Why Does This Happen?

Because the trader stops thinking in probabilities and starts thinking emotionally.

They want the market to “give the money back.”

The market doesn’t know or care about your previous loss.

What Is Overtrading?

Overtrading means taking more trades than your strategy or plan justifies.

It can happen because:

• You’re bored
• You’re trying to make more money
• You’re trying to recover losses
• You see too many setups
• You don’t want to finish the day with no trades

The Solution

Create limits.

For example:

• Maximum number of trades
• Maximum daily loss
• Maximum risk
• Trading session times

Rules create structure when emotions become intense.