{"id":153642,"date":"2019-08-17T07:15:11","date_gmt":"2019-08-17T11:15:11","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=153642"},"modified":"2019-08-17T07:15:34","modified_gmt":"2019-08-17T11:15:34","slug":"the-destructive-power-of-revenge-trading","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/08\/the-destructive-power-of-revenge-trading\/","title":{"rendered":"The Destructive Power Of Revenge Trading"},"content":{"rendered":"
August 17, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

Revenge trading is quite possibly the most counter-intuitive, self-destructive behavioral pattern a Forex trader could ever slip into. And yet, so many investors can often find themselves shackled by this seemingly unstoppable compulsion to keep placing trades, even in the depths of a never-ending losing streak.<\/p>\n

So what is it within us that just can\u2019t seem to stop this vicious cycle? Are there warning signs to watch out for to catch it before it starts? And what can we do to get out of that harmful headspace once we\u2019re in it?<\/p>\n

Why We Do It<\/strong><\/h2>\n

The answer is simple: it\u2019s pride, mixed with a hefty helping of stress. No matter how analytical forex traders claim their minds to be, at the end of the day, we must remember that we are all human.<\/p>\n

A passionate trader who has opened a position has invested more than just their money. They\u2019ve invested their time, research, and faith, both in themselves and in the markets. So a loss can have a significant impact on us, both psychologically and yes, even physiologically!<\/p>\n

What Our Body Goes Through<\/strong><\/h2>\n

Cortisol is our body\u2019s stress hormone. And losses, especially sequential ones, can significantly stimulate our cortisol production. This almost instantly compromises our ability to make logical decisions.<\/p>

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Cortisol fuels our anxiety, catapulting us into a state of panic and clouding our judgment. Our brain goes into \u201cfight or flight\u201d mode, and the immediate priority becomes to undo the damage and regain our losses.<\/p>\n

This prompts us to place impulsive trades that we have neither thought through nor considered in our larger risk management plan.<\/p>\n

How It Keeps Us In<\/strong><\/h2>\n

This is where pride comes in.<\/p>\n

We can all relate to feeling like we\u2019re failures because we\u2019re \u201closing\u201d as investors. After all, our business is to invest successfully. So, if we\u2019re technically \u201cfailing\u201d at it, it can be difficult not to take personally.<\/p>\n

But that type of negativity nurtured by high levels of stress can very quickly snowball out of control, hijacking our entire mental process.<\/p>\n

So what ends up happening?<\/p>\n