This post may contain affiliate links, which means that I may earn a commission if you click on the link & sign-up or make a purchase. You will NOT be charged extra for using the link, but it goes a long way in supporting this blog. I only recommend products or services that I have personally used or believe will add value to my readers.
Revenge trading is a hidden pitfall that has shattered the dreams of countless traders striving for profitability. The most alarming aspect is that this detrimental habit can be entirely avoided with proper awareness.
You may unknowingly be engaging in revenge trading, which is likely why you clicked on this article. This piece aims to highlight three key symptoms of chronic revenge trading and provide solutions to help you overcome it.
Deriv Broker
How Revenge Trading Destroys 95% of Traders
Symptom 1: Using Trading to Cope with Personal Issues
Many traders turn to the market as a coping mechanism for personal problems. For instance, a bad grade in school, relationship troubles, or family issues can drive a trader to seek solace in trading. However, entering the market in a compromised mental state often leads to poor decisions and revenge trades.
It’s essential to maintain a clear distinction between personal life and trading. Engaging in hobbies and activities outside of trading can help maintain this balance and prevent emotional spillover into trading decisions.
Symptom 2: Getting Frustrated and Reentering Trades
A common scenario is taking profits too early, only to watch the market move further in your favor. This can trigger frustration and a desire to reenter the trade, often at a less favorable position. This behavior stems from a focus on immediate financial gain rather than a disciplined trading process.
To avoid this, traders should concentrate on their trading strategy and allow the market to unfold naturally. If a setup isn’t present, it’s better to refrain from trading rather than forcing a position and increasing risk unnecessarily.
Symptom 3: Rushing Into Trades at the Beginning of the Week
Many traders, especially after a losing week, feel the urge to jump into trades as soon as the market opens on Monday. This impatience can lead to poor decision-making and significant losses.
To combat this, it’s advisable to reduce trade sizes on Mondays and wait at least 30 minutes after the market opens to gauge the market’s direction. Patience and discipline are crucial; forcing trades when setups aren’t clear is a recipe for disaster.
Deriv Broker
Solutions to Overcome Revenge Trading
- Recognize Your Emotional State: Acknowledge when you’re not in the right mindset to trade. Emotional maturity involves making decisions based on self-awareness and stepping away from the market when necessary.
- Focus on the Process, Not Profits: Shift your focus from immediate financial gain to following a disciplined trading strategy. This change in mindset helps prevent impulsive decisions driven by greed or frustration.
- Patience on Mondays: Avoid rushing into trades at the start of the week. Allow the market to settle and wait for clear setups before taking action.
If you suspect that revenge trading is hindering your progress, consider seeking mentorship to refine your trading psychology. Personalized guidance can help you control your emotions and develop a disciplined approach to trading. For more information on how to work one-on-one with a trading mentor, click the link in the description.
By addressing these issues and implementing the suggested strategies, you can avoid the pitfalls of revenge trading and move towards a more profitable and emotionally balanced trading experience. Thank you for reading, and we hope this article helps you achieve greater success in your trading journey.
