Revenge trading

Revenge trading is the urge to get it back immediately after a loss. The trades that follow are typically taken without a setup, with larger stakes and faster than usual. It is one of the most expensive habits in short-term trading, precisely because short expiries make it so easy to click again.

It happens because losses hurt more than equal gains please, and because a loss feels like unfinished business. The mind wants closure, and the next trade promises it. But the market doesn't know or care that you just lost: the next trade's odds are exactly what they would have been anyway, except that your judgement is now worse.

Warning signs:

• trading an instrument or expiry outside your plan right after a loss;
• raising the stake to recover faster, which is the logic of the martingale;
• clicking within seconds of a result.

Practical brakes: a rule to step away for a fixed time after two losses, a daily loss limit that ends the session, and a journal entry before the next trade. See trading psychology and the entry on tilt.