Introduction:
Every trader has been there…
You take a big loss. Your emotions flare up.
You re-enter the market—too fast, too big—trying to “win it back.”
That’s revenge trading.
It’s one of the fastest ways to blow a funded account—or your own. In this article, we’ll break down what revenge trading is, why it happens, and the simple techniques you can use to stop it before it sabotages your performance.
What Is Revenge Trading?
Revenge trading is when you emotionally re-enter the market after a loss, not because your setup is present—but because you want to “get back” what you lost.
It’s driven by:
- Anger
- Frustration
- Ego
- Fear of being wrong
And the results? Usually devastating.
How to Know You’re Revenge Trading
Here are the red flags to watch out for:
- You enter a trade immediately after a loss
- Your position size is larger than usual
- You’re trading setups that don’t align with your plan
- You say things like “I’ll make it back this session”
- You ignore stop-loss rules or risk management
If you’re doing any of the above—you’re not trading a strategy, you’re trading your emotions.
Why Revenge Trading Is So Dangerous
- It compounds losses: You’re likely entering poor setups or oversizing, which leads to deeper drawdowns.
- It hijacks your psychology: You stop thinking rationally and start gambling.
- It violates prop firm rules: Most prop firms, including FundingRock, have strict daily drawdown limits. One revenge trade can disqualify you instantly.
- It creates negative feedback loops: Loss → revenge → bigger loss → more revenge. It becomes a cycle.
Real Example:
Imagine you’re down 2% on the day. You want to get back to break-even. You double your size. The market moves against you again—and suddenly you’re down 5%, hitting the daily max loss.
All because of one emotional decision.
How to Stop Revenge Trading (Before It Starts)
- Set a Daily Loss Limit
Decide ahead of time: “If I’m down X%, I stop for the day.” No exceptions. - Use a Trading Checklist
Only enter trades that meet your strict criteria. No setup = no trade. - Create a Time-Out Rule
After a loss, step away for 10–15 minutes. This resets your emotional state. - Keep a Trading Journal
Document emotional trades. You’ll quickly see patterns—and can fix them. - Trade Small During High-Stress Days
If you’re tired, angry, or distracted—reduce your risk or avoid trading entirely.
A Mindset Shift: Losses Are a Cost of Doing Business
Revenge trading happens when traders think:
“I shouldn’t have lost. I need to fix it.”
But in reality, losses are part of trading. Even the best traders take hits. The difference is—they don’t chase.
Final Thoughts:
Revenge trading is like lighting a match in a dry forest.
One bad decision can burn everything.
The key is to recognize the signs early, have systems in place, and treat trading like a business—not a casino.
At FundingRock, we’ve seen it all. Traders who stay disciplined pass the challenge. Traders who trade emotionally don’t.
So ask yourself:
“Am I trading to win—or trading to get even?”
Only one of those leads to long-term success.