Revenge trading is an emotion-based trading strategy that can be dangerous for anyone in the forex trading business. It is a pattern of behavior where a trader attempts to make up for losses by taking bigger risks in order to chase bigger profits. This kind of behavior can be dangerous because it often leads to over-trading and taking on too much risk. It can also lead to bad decision-making, irrational thinking and ultimately, bigger losses than before. When a trader is driven by revenge, they usually don?t take the time to properly analyze the market, weigh the risks and benefits, or make a logical trading decision. Revenge trading can also lead to overconfidence and the false belief that you can make up for losses quickly.
Revenge trading can also lead to a lack of discipline in trading. When a trader feels the need to make up for losses, they often don?t take the time to properly plan out their trades and set stop loss and take profit orders. This lack of discipline can also lead to more losses and can quickly spiral out of control.
