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Are You Revenge Trading?

Speaking from experience, one of the most likely trading traps that will bit you hard is forming habits that include revenge trading. This is a trading dynamic that can have some gray areas part of it; however, with that being said, when you go about your trades in a logical manner as I explain, you can put an end to a revenge trade BEFORE it ever happens.

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Transcript:

Revenge training, maybe you've heard of this term,maybe you haven't.Either way, it's a very, very important conceptthat within your own training strategy,you need to be aware of, so let's break it down.I'm pretty sure I've talked about this before,definitely on the podcast that I have.But I don't know if I have a video on it,but I want to make sure, even if I do,it's a concept that should be definitely repeatedand have multiple videos on it.The idea for this one actually camefrom a YouTube exchange that I had with somebody.So let's start off there, and as I readthrough the exchange, ask yourself,do you see where the revenge trading is happening?If you do, awesome, I would say that as far asyour kind of understanding of this is concerned,you have a good grasp on it.Now, are you implying it, and actuallyfollowing through with it, that may be a different question.But at least you're understanding is there.If I've agreed to this exchange,and you have no idea what I'm talking about,you don't see anything wrong,you don't necessarily, just take a note ofwhat you think the revenge trading is,and that'll be a good mile marker in termsof where do you personally stand in your understandingof, again, this very vital concept.So let's get through this YouTube exchange.So Alexander says, "Slowly recovering my losses"and have found some consistency."Having said, that, this strategy I would not be able to do."My entries have to be really good or else I stop out."I think you could have waited a little longer before"you went in shorting in my view.",I replied back, "well, in hindsight everything"could have been better."They reply back, "True, but I feel like you could see"it had a ton of momentum there."I shorted Invidia, NVDA, today on accident and took"a big loss and then shorted with four time"the position size and made back all my losses"and ended green."Trading from my laptop on WiFi leads to disasters to me.A lot of that had noting to dowith a concept of revenge trading,but I want to try to make it difficult for alljust a bunch of dialogue at you,and that way you really have a good kind of teststo see where you standing regards of this.So I wanna kind of just quickly go throughwhat this person said in regards to Invidia.So NVDA was a ticker symbol and what did they say?So they made a trade, right?And this is definitely the logic sequencethat you need to be aware of.So they made a trade and then what happened?Well, they took a loss on it, right?They then took a loss.Now, the big thing here is why they took the loss?Does it really have anything to do with revenge trading?It can, in a sense of maybe it's gonna make--Potentially motivate you to do a revenge tradebut it may not, but the point here is they took a loss.Because revenge trading, there's nothing to--Think about the word revenge.You don't need to get revenge on anythingif that was a winning trade.So, that's how the early stages of a revenge tradecould potentially happen is,and I realized I'm stating the obvious here,is you make a trade and you take a loss.Now, in this person's case, this loss came from a mistake,so maybe this person's psychology,because it was a loss from a mistake,it could potentially lead to a more revengeor in some cases, it's just a loss no matter what the cost,can open the door for revenge,which can be the case for most of the time.So, now what happens here?And this is where you're understanding.What happens? What was your next--What was your solution to this?Well, the way you need to apply itand always just ask yourself iswhen you take a losing trade, ask yourself right away.Right there.Is what I'm about to do normal?Now, how do you define normal?That depends on your strategy.If you're sitting there saying,"Well, I don't even know what normal within my strategy is."That's a sign that you don't even really have a strategy,if you can't even define a baseline of normal.So, what is your normal?Again, that's a very pressing issue here for you to kind ofrun a self-audit on yourself.And if you're saying they're saying,"Well, yeah. I have a strategybut what is actually normal for my--I don't know what normal."Then you don't have a strategy.Now if you're saying, "Oh, yeah. I know what normal is.I should be doing this, that, and the other.That would be my baseline."That would define normal.Now in some cases, maybe normal can shift.So that leads to the question, how can it shift?What is a normal shift away from normal?The point is you need to have baselineswithin your strategy.You need to understand how to be able to define normal.So that's the immediate thing you need to ask yourself is,you have a trade, you take a loss,and then you're taking some sort of action,or another words--Trying to keep this color coded.Your next trade.Your next trade, you better be asking is this normal?Let's circle back to the commentthat we had in regards to this person.What did this person's action for their next trade?What did they do? They said what?They traded four times the sizethat they normally do.Is four times a size what this person normally does?Doesn't sound like it at all.Therefore, total, total revenge trade.Now in this case, did it work out?Yeah, they actually--They said they got back all their lossesand then actually put them in the green.So on the surface, they pull, that's great, it worked out,they up their size, but that's--The only reason they up their sizewas because they were irritated because they took a loss.And what that is doing is building a terrible,terrible habit.Yes, it worked out here.I'll acknowledge that again,but as far as a habit is concerned, one of these times,they're gonna breakaway from normal,they're gonna do something out of revengeand it's gonna create that much bigger of a hole,and that's what revenge trading is.If you are going away and doing something differentthan what you would normally do as far as a trade,and this is having after a loss, you are revenge trading.Now it could be after a win too.So this could be a whole separate video but if you winand then you're asking yourself,"What do I normally do?"And you notice that you're doing something not normal,that would probably not--That wouldn't be revenge trading,that would be kind of ego trading,probably overconfidence trading.Maybe I'll make another video on that.But as far as revenge trading, if after a loss,assuming you know how to define normal,find yourself doing something that's not normal,yeah, you are revenge trading,you are breaking away from what your strategy is.And just to really illiterate,does this is why--Again, it's a sound bite to sayhaving strategy is important.Okay, yeah. That's a great sound bite.Of course having a strategy is important, but why?Here is a why having a strategy,'cause when you have a true strategy,you have normal as a part of it.When you have normal as part of the strategy,when you have those baselines,you can quickly gage and kind of keep yourself accountableto am I revenge trading right now?Now if this person takes a loss, and they take actionwith their next trade, and they're saying,"Yeah, this is still normal.My position side is still normal.I'm still trading to set up than I'd normally trade."Then you're fine, that's not revenge trading at all,that's just moving on to the next trade.But if you're doing that's not normal,you are revenge trading and even if it works out,that's a terrible habit, and eventually,it will come back and bite you for sure.I'm speaking from experience.If you are out there trading a loan currentlyand maybe are in the market looking for a community to join,to assist you in your trading or to just help you,give you another set of eyeballs,then I do have a private trading community.We can trade alongside me and other experienced traders.So, what you see popping upon the screen right nowis both an information link, so if you clickon the inner circle one, that is gonna take youto the page where I explain all the detailsof what exactly come with a community,both a chatroom and a newsletter.And then the other image that has popped upis a behind the scenes tour, where you can see exactlywhat is going to be contained within a community.I'll take you through like I said,a behind the scenes tour of everythingand that way you'll know preciselywhat you are getting when you join.So, definitely check that stuff out if you are interestedand thinking about wanting to join communityand let me know if you have any questions.

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