We all heard about revenge trading and even by knowing the disadvantages of it sometimes we get in the trap and trade with negative emotions. Revenge trading comes from one thing only, blaming the market for your loss. But let’s think who is responsible of loss? The obvious answer is “YOU”.
The market is never responsible for your loss so getting mad at the market and trying to seek revenge really doesn’t make sense. Trading is all about taking responsibility.
In the emotion of revenge trading sometimes you get crazy at the market and try to get your losses back in an emotional way instead of a rational and logical way and in this way, you are viewing the markets through your emotional filters and not are the best state to be trading mind.in this way you will make more trading mistakes.
For example: Let’s say you lose 45 pips in the last trade. Will 30 pips profit be enough in the next trade? The market may be clearly telling an objective observer that’s all there is in this trade (30 pips) in next trade. But to the person who just lost 45 pips, 45 pips is what they will see in the markets, the trade rallies 30 pips they hold on for a hope of bigger gain and it reverses ending up 30 pip loss, adding to the earlier 45 pip loss. This is a revenge trading mindset.
but ask yourself. Does one trade really have anything to do with the other? The market doesn’t know or care how much you made or lost in the previous trade. It has no bearing whatsoever on your next trade or your next 100 trades. One trade has nothing to do with the next trade. They are not related in any way, other than in your own mind, you can only profit from what is available in front of you. And again, the opportunity or lack of has nothing to do with your last trade or last 10 trades.
I am sure many of us have read mark douglas books in which he clearly says: “You don’t need to know what’s going to happen next to make money. Anything can happen. Every moment is unique, meaning every edge and outcome is truly a unique experience. The trade either works or it doesn’t.”
It is difficult to avoid revenge trading but by practice you can overcome this emotion. you just should try to accept the loss and not let your judgement in the future be clouded by your ego. you should focus your efforts and energy on analyzing what went wrong and figuring out what you can do to improve your subsequent trades.
Trading is all about emotions and always trade with less leverage and with proper discipline.As I always repeat in my all post that it’s ok to lose the some of the opportunity rather than losing too much off money, particularly in FX business the trade will come again next day but it’s hard to make the money back because of too much emotions and psychology involved in this business.
Good Luck with you trading and investing!
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