What Is Revenge Trading?

Revenge Trading now is a type of trading that is irrational and simply done in a fit of anger or because of not being emotionally capable. Whenever an investor or a trader loses a big amount of their money in the trading period, there's a high chance that they will soon resort to revenge trading. In simpler words, it's a normal human tendency to try out hardest to recover something that we have lost. Every one of us thinks the same way. Hence, when an individual faces massive losses because their trading went wrong they try to recover it.
However, the problem here is some of the individual traders and investors couldn't keep up their rational thoughts aside and dive into massive trade after trade to recoup and recover the amount that they have lost. It might be the anger of not being able to gain the profits they planned out initially, or it might be the fear and going into a panic of facing losses and all the other thoughts of financial burden. These thoughts make an individual so aggressive that they forget about their tried and tested methods and keep on investing in different and bigger investment trades.
As we can predict, these irrational and aggressive moves almost always end up badly creating the hole of the losses bigger and deeper for the individual. And as much greater losses the individual keeps facing the more aggressively, he starts to cope with it but in an entirely wrong way. It's the thought like the bigger the retaliation the more chances of them recovering their losses. We know that by revenge trading its only one thing that would happen and that is more losses. It's important to know how to control yourself at times like this.

Mostly every trader or investor you talk to will certainly deny ever falling into the trap of revenge trading, but they have. Truth be told, every single one of the investors and traders out there has at some point if their trading careers faced revenge fighting. So let's read further and know what can an individual do to avoid being on the tilt and stop themselves from revenge trading

Step Back From Trading For Time Being - The bigger the loss the harder it gets to control the emotions and thoughts that leads to revenge trading. It's even tougher to keep an objective view and act rationally at times so tough. However, the best and the most rational thing you can do here is that you can step away from doing any kinds of trading and involving in any investment for some time. Give your brain enough time to relax and let it come to terms with the loss and then plan your strategy with a clear mind. Because, decisions are taken in an emotional state, almost always ends up doing more tragedy.

Analyze The Market Conditions - The best thing you can do on your time off apart from relaxing is analyze market conditions. Look out for the shares that are safe and can give you small profits. It's better to go for small and multiple profits rather than investing in a big one and risking more of your investment. Analyze how the market is working and what the experts are recommending to go for. Look out if the market conditions are too fluctuating and volatile to work for, see if the risk rate is okay or quite high to play along. Gather in as much info as you can before coming into action.

Plan Your Strategy Accordingly - After analyzing the state of the market thoroughly, that is when you should start planning your strategy according to your investment budget. Plan your exit strategy well. Think what will you do if the market doesn't act as predicted. Try your best to not force a trade just because you have to somehow recover for your losses. Strategic planning and financial information with risk tolerance might just be what you need at the time being.

Self-Assessment Is Also Necessary - In all the chaos that you are going through it's hard to keep yourself from reeling back and gambling in all your money. However, doing a self-assessment and knowing that you can make it better slowly and you may recover some of your losses if not all is the foremost important thing.

Allow Yourself To Make Necessary Changes - After you have gone through all the possible Analyses, allow yourself to try to make all the changes that you see are necessary. Be open-minded and take up new roads if you think that might help. Work on your strengths and know about your weakness and try to steer clear from them for the time being.

Losing the chunk of your hard-earned money might just feel like a big kick on your stomach. It's terrible to go through such loss and it destroys livelihood and mental piece. However, one needs to understand that a time as hard as this requires a stable mental space and plan your next movement strategically.