Revenge trading in Forex market is a familiar situation which affects newbie and experienced traders alike. This is an emotional trading behavior that is as a result of a trader being driven by the desire and hope to get back his/her losses through making rather irrational decisions. In this article, it is possible to provide the rationale of trading and to describe key measures for avoiding this type of trading in the Forex Factory. We will also respond to some of the questions that would help you alleviate the impacts of revenge trading on your trading process.
What is Revenge Trading?
Retaliation trading means making decisions in the Forex market without precise data to cover the losses experienced in the recent past. This trading emotion will lead to improper trading behavior, and the trader will continue to sink in more losses. Thus, it is important to establish that trading has a psychological nature in order to design strategies for overcoming this problem.
Why Does Revenge Trading Happen?
It is because of such cognitive heuristics and other emotions from the loss-making trades that revenge trading happens. Some of the primary factors contributing to trading are: The following are some of the main components for revenge trading.
- Fear of loss
- This is the need for that disasters or mishaps in counselling require fast or quick recovery.
- Overconfidence
- Unrealistic expectations
- Poor risk management
They provide reckless decisions in an effort to regain their loss to probably make great profits and this leads to more losses.
What action should be taken so as to minimize or eradicate revenge trading in the forex factory?
To avoid revenge trading on Forex Factory, consider the following strategies: In order to escape revenge trading in Forex factory, one can consider the following strategies:
- A well thought out plan: Every pit trader should come up with a definite strategy on how he wants to trade the particular stock.
- Establish realistic expectations
- Use the right measures of risk management
- Keep emotions in check
- Try to acquaint yourself with the market and endeavour to know how the market is and how to go into it.
The principle of avoiding revenge trading therefore begins with the formulation of the trading plan which entails goals, the trading rules and trading strategies to pursue. There is always the need to define and achieve realistic goals where one is fully aware that trading is not always a walk in the park even if it is undertaken with the spirit of making lots of money from the market in a given period of time.
Binary options is more of self control and it is always important that you backup and have a feel of when to take or when not to take a particular decision due to feelings you may have developed through the whole period of trading. It is helpful to find out the position of the stocks in the market and get to know more about various staking techniques so as to avoid making many blunders.
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Frequently Asked Questions
Q: When can I be sure that I am revenge trading?
A: If you switch to active trading right after taking a hit in your portfolio you might be compromising on trading. Some of the manifestations of trading are the actual trading with little fundamental and technical analysis, increased turnover of trades, insatiable desire for risk.
Q: Therefore the question, can revenge trading be prevented or eliminated?
A: However, revenge trading is not unbeatable, it can be managed by obeying these dictums to trading; having a trading plan, controlling emotion, and managing risks.
Q: What are the implications of revenge trading to my trading accounts?
A: Revenge trading can result to more trades and a big loss simply because the trader is acting in a hasty manner with no regard to sound trading practices. This eventually has a negative effect to your trading account.
Conclusion
In order to manage revenge trading in Forex Factory platform, it only requires a perfect trading plan and emotional intelligence. Since trading is detrimental to a trader, one ought to come up with a good trading plan, manage risks and avoid let emotions control them, this will reduce or eliminate the impacts of trading on the trader. When you are aware of you, you can try to tackle the trading behaviour and work on other aspects of trading as well.
Warning
It is always important to mark that trading success is not a product of a small amount of time, first of all, it requires patience, secondly – perseverance, and thirdly – proper emotional resources. Through the explained above approaches, one should be able to eliminate revenge trading and therefore make consistent profits in trading.
