Revenge Trading

This is a discussion on Revenge Trading within the Psychology, Risk & Money Management forums, part of the Methods category; Originally Posted by Zelnik Used to get so mad I could throw my cellphone in the wall, hit my laptop, ...

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Old Oct 13, 2010, 5:42pm   #25
Joined Sep 2008
Re: Revenge Trading

Quote:
Originally Posted by Zelnik View Post
Used to get so mad I could throw my cellphone in the wall, hit my laptop, throw it.. I actually bought a dog just to be able to get out of the house when I get mad and take long walks. Then when I get back in I usually feel better and can make better decisions again..

Most important thing is to actually take a break I think...
We all want to kick the computer or cuss at it every once in a while!
Take a break or shutdown for the day. You need time to clear your thoughts and settle down.

Peter
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Old Oct 13, 2010, 6:36pm   #26
Joined Aug 2003
Re: Revenge Trading

I don't know what all this revenge malarky is about total madness I tell you total madness.
We have a super trader here


kajol thappar

Quote:
I am currently making a consistent 40-50 percent return a month on Forex with a 50:1 margin. THAT's HUGE. If I was trading without margin, that would be about 1percent. LOLX. Improper money management = gambling. Make good use of that margin, and you'll be rich. Just do the math.

$2500 x (1.40)^12 = Profit in 1 year.
Profit in 1 year x (1.40)^12= MILLIONS
.

We should just give him our money to trade and make us 40-50 percent a month
Then we can have plenty plenty ruppees that should buy a few chicken tikka masalas

It madness to revenge trade i tell you its madness!
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Thanks! The following members like this post: wackypete2
Old Oct 13, 2010, 7:32pm   #27
Joined Sep 2008
Re: Revenge Trading

I saw "MILLIONS" and practically stumbled over myself trying to be the first one to sign up!!

Peter
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Old Oct 25, 2010, 2:05pm   #28
 
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Joined Nov 2003
Re: Revenge Trading

Being there, done that, no doubt many have, nobody said it was easy, discipline and consistancy, entry and exit the same every time, if your trading your hard tested and forward tested system, you should be able to accept losses as part of your winning strategy, problem is were human and the mind plays strange games with us.Two losing trades on the bounce and I finished for the day, then paper trade the rest of the day, and review the whole day, what went wrong, what went right and why etc etc, it helps me tremendously
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Old Oct 25, 2010, 2:55pm   #29
Joined Jun 2009
Re: Revenge Trading

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Originally Posted by trader_dante View Post
Good point. I often wonder if revenge trading is less about making the money back and more about punishing yourself, subconsciously.

Obviously, the conscious mind tells you that you must find a good setup in order to make your money back but I do think on some level many traders are thinking to themselves, "I made some sh*t trades, so I don't care, I'll just take any old setup now - I deserve to lose money for trading so bad in the first place".

Some people will think this is a crazy argument although I always have Ed Seykota's "everyone gets what they want out of the markets" rolling around in the back of my mind.

I know this to be the case with me. Recently I had a ten or eleven winning trades in a row. They were sizable trades too in the sense that each one was netting a big gain for me so I felt on top of the world.

Then, on, lets call it the twelfth trade, I got a bit complacent and when the trade got to the first problem area I didn't get any out like I usually do but held it for the ultimate target. Suffice to say it didn't reach the target and started coming back. Since I was annoyed at having got nothing out, I just left the trade rather than securing anything and took my first loser.

Since I knew I had made a mistake and that mistake had not only broken a great winning streak when it shouldn't have but also cost me a good deal of money after being nicely up, I lost the plot somewhat.

The next trade was a complete mess. This is because I had lost my patience. The very next day I decided the market owed me what I had lost and in I jumped on the kind of downward movement that I try to repeatedly tell everyone is for suckers. I sell the low and it climbs up only to stop me out. What made this trade worse is that after it takes me out, it collapses.

So now the problems are compounding. I've had two losers back to back and the second one has topped and tailed me which makes me feel like I'm not only wrong but I'm also sh*t.

The negative emotions are not only increasing because the losses are increasing but because of the way I am losing.

So I take a break, I calm down and a day later I take the third trade. Now this trade is a good trade according to my rules but the problem here is that I don't get out where I should for a great profit because the money I would make isn't enough to compensate for the last two losses I have taken. The market comes back once again and this is the third loser.

At this point, I withdraw all funds from the account and leave a zero balance. I know this sounds extreme but it is easy to pay money into and out of an account with a debit card (it takes seconds) and the way I see it - no money, no trading. So temptation is gone and when I have had time to assess, in I can go again.

This is far, far better for me for just taking a break and going fishing etc and I will tell you why.

The good thing about doing this is that the next trade I take, I will have to PUT MONEY INTO THE ACCOUNT.

You get your card out, you fill in the amount you want to transfer - it feels like you are paying a bill online or something. This makes you realise you are trading with real money and not an electronic number that means nothing. As a result it means that you make damn sure the setup you are taking is a good one. Or at least that is the way it works for me.

This is one of my personal strategies for stopping the bleeding and making sure that when I come back, I come back strong.
Holy crap this is a good post and that is really how it happens, good advise there.
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Old Oct 31, 2010, 7:55pm   #30
Joined Oct 2003
Re: Revenge Trading

Don't mean to be insulting but if you have this problem are you sure you are cut out to be a trader! Or maybe you are trading in a way that does not suit you! Are you making money that is the main thing nothing else matters really.
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Old Nov 1, 2010, 7:10pm   #31
Joined Sep 2010
Re: Revenge Trading

Seriously, if you have a bad trade and you can't handle it just take a break, have the day off.

Being stressed whilst holding the order book is not a good look, you got to be calm at all times to trade well.

Another thing is you should have it in your mind what makes a "bad trade"

Buying a stock and having your stoploss hit isn't a bad trade, it just means it didn't work out and you took a small loss. It's only a bad trade if you didn't follow your trading rules.

A bad trade can also be when you buy a stock, there's a terrorist attack or something crazy happens and your stoploss doesn't get filled, that is a bad trade and when that happens, take the week off!! ;-)
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Old Nov 3, 2010, 9:17am   #32
 
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Joined Nov 2010
Re: Revenge Trading

I think certain personality types are more prone to "Revenge Trading" than others. In my experience, the best way to manage this tendency, is to use the following guidelines:

1. Carry out your "due diligence" THOROUGHLY before entering the markets (this includes setting up exit points well in advance BEFORE placing the trade)
2. If the market does not behave the way you expected it to within a time interval after you have placed your trade - GET OUT, do not wait for the market to prove you wrong (the big money is always on the surprise side)
3. Not get too attached to the outcome of any particular trade.

Regarding point 3, this is easier said than done, especially if you are trying to "force" money out of the market - this is why its never a good idea to put financial demands on the market by for example, needing money obtained from the market to pay your bills.
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