The mental game
What is a revenge trade, and how do you stop?
A revenge trade is a trade you make because you just lost and you want the money back right now. You've stopped following your plan, and you're not reading the chart anymore.
Bri KubistaFounder of BunchaData
I've made revenge trades. I got beat up about it, but then I learned it wasn't my strategy. It was my mindset.
Zero stars. I do not recommend it.
How to spot one before you click
A revenge trade can look like any other trade on your screen. What gives it away is why you're making it. You might be about to make one if:
- You just took a loss, and you're already hunting for the next trade.
- You're trading bigger than usual so you can get it back faster.
- You're looking at something that wasn't in your plan this morning.
- You can't say at what price you'd be wrong.
- You're thinking, "I can make it back before the bell."
The size of the trade doesn't decide it. A tiny trade can be a revenge trade if the reason is "I need that money back."
Why it can cost more than the first loss
Say you have $8,000, and you risk $80 on each trade. You take a loss. Now picture two versions of you, and let's say the next two trades lose too. Losing streaks are normal, so this isn't a wild scenario.
| Trade | Sticks to the plan | Doubles to win it back |
|---|---|---|
| First loss | $80 | $80 |
| Second loss | $80 | $160 |
| Third loss | $80 | $320 |
| Total lost | $240 (3%) | $560 (7%) |
Same three losing trades, and more than double the damage. Trying to make it back fast is how a small loss becomes a big one.
How to stop a revenge trade
After a bad loss, here's the whole plan:
- Stop. Close the app. You're done for the day. The market will be there tomorrow.
- Walk away. Get away from the screen. Go eat, take a walk or go to bed.
- Come back smaller. When you're calm, come back with less on the line, or with no real money at all. The position size calculator shows you how many shares fit your limit.
This is hard to work out in the moment, so decide it ahead of time. Write your rules while you're calm. The you on a bad day needs to hear from the you on a good day.
Your mission
Grab a pen and finish this sentence on a sticky note. Put it where you'll see it when you trade.
"If I lose ______ in a day, I'm done until tomorrow."
Practice it with fake money
It's easy to be calm reading this. Try it when you're down. Survive the Market gives you $10,000 in play money, and every chart is made up. If you raise your size right after a loss, the game calls it out and counts your revenge moves.
My guide, Read the Data: The Strategy Playbook, goes further, with a full reset card for after a bad loss and how to set your limits.
Common questions
Is revenge trading the same as FOMO?
No. Revenge comes from a loss: "I need to make that back right now." FOMO comes from watching other people: "Everybody's making money but me." Both can get you into a trade that wasn't in your plan.
What about an "f*ck-it" trade?
That's the revenge trade's tired cousin. Revenge still wants the money back. An f*ck-it trade is when you've stopped caring, you're down, and you click anyway. Walk away from that one too.
How long should I wait after a loss?
If you're asking because you want to get back in, wait until tomorrow. There's no magic number of minutes, and you know better than anyone whether you're calm. If you're still thinking about the money, you're not ready.
Do I have to make the money back?
No. You don't have to make it back from the same trade, on the same day, or in the same way you lost it. Trying to do it fast is how you lose more.