Revenge Trading

Revenge trading is the tendency to immediately re-enter the market after a loss — often with a larger size and less analysis — driven by an emotional urge to "win back" the loss quickly rather than a valid new setup. It typically compounds the original loss rather than recovering it, since the entries are reactive rather than reasoned. A daily loss limit or a mandatory cool-down period after a loss are two of the most effective structural defenses against revenge trading, since they remove the option to act on the impulse in the moment.