65-Day Academy · Day 34 · Psychology & Biases
Revenge Trading — the Second Loss
The pattern
A loss lands → the urge to "get it back" immediately → a larger, lower-quality trade → often a bigger loss. Revenge trading is loss aversion plus ego: the account's P&L has become a scoreboard for self-worth. It is the single most common mechanism by which one normal −1R becomes a −5R day.
The circuit breakers
Mechanical, pre-committed: (1) a daily loss limit (e.g., −2R) after which the platform closes for the day; (2) a mandatory cool-down (30 minutes minimum) after any stopped-out trade before a new entry; (3) size stays FIXED during recovery — doubling size to "catch up" is the revenge impulse with a spreadsheet.
What you'll practise
True or false: after two stopped-out losses, doubling your next position size is a rational way to recover the day.
10 XP in the app · introductory
Sources
- Trading in the ZoneMark Douglas
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All lessons are for educational purposes only and are not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk and are not suitable for every investor.