What causes revenge trading?

Loss aversion — the pain of losing money triggers an urgent need to recover it immediately. This combines with ego protection (not wanting to admit the loss) and the illusion that the next trade will make it right.

How common is revenge trading?

Extremely common. Surveys suggest that over 70% of retail traders have engaged in revenge trading at some point. It is one of the top three reasons accounts are blown, alongside overleveraging and lack of strategy.

Can a daily loss limit prevent revenge trading?

Yes. A hard daily loss limit of 3% is the single most effective rule against revenge trading. When you hit the limit, you physically cannot continue the destructive cycle because your platform session is over.

How long does it take to break the revenge trading habit?

Most traders who implement daily loss limits and mandatory waiting periods see significant improvement within 2-3 months. The key is consistency in applying the rules, even when it feels frustrating to stop trading after a loss.

Strategy GuideUpdated: April 202611 min read

Revenge Trading: Why It Happens and How to Stop

Vikram Mehta

Technical Analysis Specialist & Professional Trader

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Revenge Trading: Why It Happens and How to Stop

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