How Can You Avoid Revenge Trading?
People do trading to make money. When you take an entry and see the price movement, you are excited when the price goes up and you might get worried when the price falls. When you do revenge trading after a big loss, you are driven by emotions.
You may end up with more losses that can make your trading capital zero. You do not want this to happen, but your actions lead you there. So how can you avoid revenge trading?
Stick to your trading plan
Do you have a trading plan when you take an entry into the market? Or, you just buy because you feel like the price will go up and you sell when you feel like the price is going down. The crypto market can be a roller coaster.
If you do not have a trading plan, you don't know where you are supposed to take a profit or where you should set stop loss and exit. There is a high chance you will lose money in trading. And when you see big losses, that triggers you to do revenge trading.
So first you should make a trading plan and then stick to your plan. The market can move in any direction, but you know exactly what you are going to do. You just execute your trading plan. It will help to avoid revenge trading.
Maintain a trading journal
If you do trading, but you do not use a trading journal, that is unlikely to happen. You need to use a trading journal and record every single trade including why you taking an entry, which strategy you use, your emotional status, your mistakes, and what you learn from a trade.
Your trading journal shows you a clear picture. You can see exactly what you are doing since you document everything over there. When you see you are driven by emotions and you do not pay much attention to the strategy that you are supposed to follow, that's a red flag.
It reminds you of where you should stop and what kind of mistake you are making. You may see how you react in a particular situation. So you can decide what to do to avoid revenge trading.
Lean to accept your loss
It feels terrible when you lose money. When you do trading, you know no one can tell exactly which direction the market will go. You can do technical analysis to define your entry, exit, and profit target.
You are dealing with probability. If you think you are right and do not exit where you plan to exit, you are not sticking to your trading plan in the first place. You just cannot accept losses in trading.
You need to learn to accept losses when you trade. Successful traders make losses, but they cut their losses short and save capital. If you follow your system properly, you will have more wins than losses, you will make profits eventually.
Take a break from trading
Taking a break is easy, right? When you make losses in trading, you just cannot stop thinking about that. You feel terrible. You want to recover your losses fast and that may trigger revenge trading.
Taking a break from trading is a way to avoid revenge trading. Go out and do something else. There are many things in life besides trading. Just shift your focus for the time being. It helps avoid revenge trading.
So what else can help a trader avoid revenge trading? Please feel free to comment below. Thank you for reading this post.
