How to Stop Revenge Trading

Revenge trading is trading to win back a loss instead of following your plan. The signs are consistent: a larger size than usual, a new trade soon after the last one closed, a setup you would normally skip, and a feeling that the next trade has to fix the previous one. It is trading driven by the loss, not by an opportunity.

It is hard to stop because it happens when your judgment is weakest. The urge is strongest right after a loss, at the moment you most need discipline, and in the moment it feels like a reasonable decision. The revenge trading and the break-even effect article explains why losses push people toward larger risks.

Rules that interrupt the pattern are written before the trade. A cooldown, for example no new trade for a set time after a loss, gives the urge time to pass. A size cap says your next position cannot be larger than your normal one. A daily loss limit ends the session after a set loss. These are examples to test, not prescriptions, and the numbers are yours to choose.

A rule is worth keeping only if it changes what you do, and that has to be measured. After a loss, compare how soon you trade again and how large the position is with your normal pace and size. The trade analyzer on this page shows both from a trade history file. Without that comparison you only know how you feel about the rule.

Try one rule at a time over a fixed number of trades, then compare before and after. Keep the sample size in mind: a handful of trades can look like improvement from luck alone. The revenge trading analyzer and position sizing analyzer show you what changed.