What is revenge trading?
Revenge trading is a situation where we experience consecutive losses in trading but we tend to continue trading with a tendency to increase the size of the position.
Revenge trading occurs because of poor risk and money management that we have. Traders who do revenge trading tend to go all in until they have the potential to lose all their assets because of the tendency to "continue to add" every time they lose trading.
To avoid revenge trading, you must understand:
- Always risk 1-3% of the portfolio for each trading position opened.
- Understand that trading is a risky and dangerous activity so you have to be careful from the start regarding all investment decisions made.
- Always understand that trading is the same as business and no one wants a losing business so always be careful before opening a certain trading position.
- Understand that there is no such thing as "get rich quick from trading" everything takes a process and the process will always take time.
Who likes to do revenge trading?