Revenge Trading

This is a discussion on Revenge Trading within the Psychology, Risk & Money Management forums, part of the Methods category; Hi all, I have been day trading stocks for a few years now and have not been profitable up to ...

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Old Apr 4, 2010, 6:01pm   #1
 
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Revenge Trading

Hi all,

I have been day trading stocks for a few years now and have not been profitable up to this point. One of my biggest problems is revenge trading. One or two losses doesn't bother me but three or four in a row seems to knock me off balance, and I HAVE to try to make those losses up. I start taking trades that don't fit my system, trading with more size, and before you know it, I have a big losing day. This is so frustrating, because 95% of the time I do this, I lose money, but it's so hard to control my emotions sometimes. I usually go back to paper trading if I hit a really bad streak, I can trade decently on paper. But when I go back to real money, it all falls apart again.

I have doubts that maybe I'm just not cut out for day trading, but yet I don't want to give up, I want to overcome this. Has anyone experienced this problem, and how do you deal with it?

Thanks.
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Old Apr 4, 2010, 6:45pm   #2
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Re: Revenge Trading

I used to be absolutely terrible at revenge trading. The best thing you can do (as soon as you feel the urge to revenge trade) is switch off the computer and go somewhere where you can't access your trading platform.

Go for a run, go down the pub, go fishing - anything

Just get away from your trading setup. Even if it's one hour into your trading day. Stop for the day and distract yourself from anything trading related.

After a night's sleep, I usually found that I was fresh, psychologically balanced and ready to go again.
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Old Apr 4, 2010, 6:59pm   #3
Joined Nov 2009
Re: Revenge Trading

I agree with P5 on this...This is a problem I have also struggled with for years.. although I have always called it anger trading.(grrrr!)
I have a 3 trade rule that normally keeps me out of trouble .. 3rd losing trade in a row and I take a break.. leave the screen and go for a long walk or something!. 3 trade rule works for me but you may need to adapt it a bit to suit your style!.. dont beat yourself up over this problem though because i think it is something everyone suffers from..I have wiped out my account several times over the years doing exactly this .. but then I have recovered by trading like a grown up instead of throwing the toys out of the pram!.
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Old Apr 4, 2010, 7:24pm   #4
Joined Apr 2010
Re: Revenge Trading

Quote:
Originally Posted by byeung7 View Post
Hi all,

I have been day trading stocks for a few years now and have not been profitable up to this point. One of my biggest problems is revenge trading. One or two losses doesn't bother me but three or four in a row seems to knock me off balance, and I HAVE to try to make those losses up. I start taking trades that don't fit my system, trading with more size, and before you know it, I have a big losing day. This is so frustrating, because 95% of the time I do this, I lose money, but it's so hard to control my emotions sometimes. I usually go back to paper trading if I hit a really bad streak, I can trade decently on paper. But when I go back to real money, it all falls apart again.

I have doubts that maybe I'm just not cut out for day trading, but yet I don't want to give up, I want to overcome this. Has anyone experienced this problem, and how do you deal with it?

Thanks.


All traders have losing trades, it's universal in the world of trading. If what you do produces profit in the long run then this is what you need to keep in mind at all times. One trade does not make a trader, successful trading is based on robust longevity of a method or strategy that puts the trader into positive territory consistently over time.

When the markets re-open, have a day off, let someone else make one trade for you on your account. If your trade parameters are set correctly it shouldn't matter to you wether or not the trade gets stopped out or makes money. The markets are here to stay.
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Old Apr 4, 2010, 10:25pm   #5
Joined Sep 2004
Re: Revenge Trading

Try asking yourself this...

"Just who am I taking revenge on?" Try and remember the market is a lot of things but one thing it truly isn't is personal.

Hope that helps.

GJ
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Old Apr 5, 2010, 9:02pm   #6
 
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Re: Revenge Trading

byeung7 started this thread Thanks guys, for the replies, very helpful. Nice to know I'm not the only one!
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Old Apr 13, 2010, 6:38pm   #7
 
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Re: Revenge Trading

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Originally Posted by GammaJammer View Post
Try asking yourself this...

"Just who am I taking revenge on?" Try and remember the market is a lot of things but one thing it truly isn't is personal.

Hope that helps.

GJ
Who is responsible for the loss? The market or the trader (why would a failed trade illicit such an emotional response - poor risk management and or over committed on position size)? Moreover, when a trader goes into revenge mode, who is likely to come off worse? Maybe something we can all think about the next time we get stung...
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Old Apr 15, 2010, 10:46pm   #8
 
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Re: Revenge Trading

Everyone has to go through these stages at some point man. Like Paulie said, get away from the computer. Go for a run or workout or whatever other hobby interests you. Getting your mind off of the losses will become second nature after some time and experience.
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Old Apr 23, 2010, 4:59pm   #9
 
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Re: Revenge Trading

Great thread! I'm also a victim of revenge trading. I see that loss piling up and think "yeah, I'll show the market, I'll win it all back AND some." Then subsequently fail miserably.

I've only been successful at regaining my loss and some after taking a short break and refreshing my brain. And then if I get ahead by a small amount I take that as a win and call it a day for trading.
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Old Apr 23, 2010, 5:13pm   #10
 
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Re: Revenge Trading

If you can't get the "revenge" bit out of your brain - and it is difficult, always remember that "revenge is a dish best served cold". Thus if you really feel the need to get back at the market (despite the fact that no one is out there to get you) just do as all previous have suggested - walk away and come back later. You can then take your revenge in a cool, calm, collected, measured, and rule-compliant trade and stuff the profits in your pocket.

It's the only way.
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Old Apr 23, 2010, 6:04pm   #11
 
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Re: Revenge Trading

So if revenge is a dish best served cold, and revenge is sweet.

Does that make revenge ice cream?
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Old Apr 23, 2010, 6:07pm   #12
 
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Re: Revenge Trading

I think you are on to something Jon.

Considering most distraught girls who just broke up with their bf's eat ice cream for comfort in place of revenge...
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Old Apr 23, 2010, 6:09pm   #13
 
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Re: Revenge Trading

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I think you are on to something Jon.

Considering most distraught girls who just broke up with their bf's eat ice cream for comfort in place of revenge...
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Old Apr 23, 2010, 6:26pm   #14
 
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Re: Revenge Trading

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Originally Posted by GammaJammer View Post
Try asking yourself this...

"Just who am I taking revenge on?" Try and remember the market is a lot of things but one thing it truly isn't is personal.

Hope that helps.

GJ
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.
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Last edited by trader_dante; Apr 23, 2010 at 6:34pm.
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Old Apr 23, 2010, 7:04pm   #15
 
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Re: Revenge Trading

Good advice there trader_dante almost like playing a psychological trick on your own subconscious..
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