Revenge Trading

Revenge trading is the urge to immediately win back a loss, usually through a larger, faster, less carefully considered trade taken right after a bad one. It replaces a trader's normal decision-making process with a single goal — undo what just happened — which tends to produce exactly the decisions that make things worse: positions sized larger specifically to "make it back faster," entered without the trader's usual setup criteria, under a completely different mental state than the one that selected the original trade. A single planned loss, well within an account's normal risk tolerance, can escalate into a much larger one within a single session once revenge trading takes over. Many traders build in a deliberate rule specifically for this moment — a mandatory pause after a loss, a hard cap on trades per day, or a rule against increasing size after a loss — since the goal isn't avoiding all losses, but preventing one ordinary loss from cascading into several unplanned ones made under emotional pressure.