What it means
Revenge trading is a specific tilt pattern where the trader enters new positions whose primary justification is 'making back what I just lost' rather than the setup's quality. Common pattern: take a -1R loss, immediately enter a counter-trend trade at 2x size to 'win it back.' The new trade is typically NOT a valid setup — it's emotional recovery dressed as analysis. Revenge trading is the single most reliable way to turn a -1R loss into a -5R or -10R disaster.
Why it matters
Revenge-trading sequences explain why most catastrophic losses are NOT a single bad trade — they're a sequence of escalating sizing into bad setups, each justified as 'recovery.' Recognizing the pattern after the first revenge trade can interrupt the cascade.
How to use it
After any losing trade, take a mandatory 5-minute pause before the next entry. If the next trade would be (a) in the same instrument, (b) at larger size, (c) in the opposite direction of the loss, treat it as revenge trading and skip it. Wait for a setup that you would have taken without the prior loss as context.
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