How to Handle Revenge Trading Urges After Losing Trades in Forex

Unavoidable in Forex trading is losing trades. Professional traders often lose even when they are in the business. It is never only strategy, but the response to a loss, that makes the difference between profitable and unprofitable traders. There is a strong desire among many traders to restore the losses in the near future, and these desires are usually accompanied by emotional and impulsive decisions. This practice is referred to as revenge trading, and it can be considered as one of the reasons why traders blow their accounts the most frequently.

Revenge trading is not imminent since traders are not knowledgeable. This is due to the fact that feelings prevail over logic momentarily. This is a behaviour one must understand and know how to keep under control to achieve success in the long run in Forex trading.

What Is Revenge Trading and Why Traders Fall into It

Revenge trading is where a trader makes a trade when they are frustrated or angry at a failed trade. The trader will want to recover the lost money within the shortest time possible by going to the market without thinking about the valid setup.

This normally occurs due to the fact that losses are personal. When traders lose, they tend to think of failure, thus leading to ego and emotional pressure. There is also the pressure that is established by the opinion that the market is passing them by. Consequently, these traders either give up on the plan, take bigger risks or accept low-quality trades. In the long-run, this habit causes inadequate performance and major setbacks.

Indications that You are Revenge Trading

Most of the traders do not even recognize that they are revenge trading until it is too late. The following are typical warning signs:

• Making trade moves without verification.

• The trade-off is to increase the lot size following a bad trade.

• Neglecting or eliminating stop losses.

• Making a series of trades within a limited period.

• Emotionally switching methods or timelines.

Whenever such acts are done right after one has lost, then they are probably driven by their emotions rather than by analysis.

How to Control Revenge Trading Urges

The first step in controlling revenge trading is to slow down. The last thing to do when one is losing a trade is to stop. A brief rest period will allow the emotions to calm down and enable one to recover objectivity. The risk ought to be clearly defined by the traders before engaging in any trade as well. In the case of a fixed risk, then no emotional recovery of losses needs to take place.

The other significant regulation is to establish a daily limit of losses. When this limit is attained, then the trading should cease on that day. This saves on capital and emotional spirals. A trading journal tool is very effective. A written record of thoughts and emotions after losing helps traders to identify patterns and become more self-aware with time.

Practical discipline rules that help reduce revenge trading include:

• Resting after every unsuccessful trade.

• Exposing itself to a specified percentage risk per trade.

• Selling just pre-arranged arrangements.

• Ceasing daily with loss limits.

Psychological Discipline trading in Forex

Forex trading is very psychological. One cannot succeed without technical knowledge. Traders have to be trained to take losses, as it is in the business. A loss does not imply that the strategy is destroyed, and neither does it indicate the trader is wrong. It merely implies different ways of probabilities to be played out.

Emotional balance can be restored using simple habits. It is possible to change the attitude by stepping out of the screen, concentrating on breathing, or examining the trading plan. It should never be processed with a direct aim of earning profit. Consistency traders outperform recovery traders naturally.

Practical Trading Scenario

Take the case of a trader who is losing a trade at a volatile trading session. The trader bangs his head against the wall and proceeds to enter another position without verification, and increases the position size. This business is also a loss, which leads to more emotional stress. On the contrary, a disciplined trader would take the first loss, halt the trading activity, analyse the set-up and wait till the next trading opportunity arises. In the long run, this regimented style safeguards money and inculcates trust.

Conclusion

One of the most devastating in Forex trading is revenge trading. Losses are unavoidable, but emotional responses are elective. The traders who cultivate the disciplines, uphold the risk management and remain patient will tend to be long-term consistent. Winning in Forex trading is about control and not speed.

It is purely educational and is not financial advice. Trading in forex is risky, and traders have to be responsible in their trades