DEFINITION
Revenge Trading
Taking impulsive, oversized trades to recover losses after a losing trade or day. The single largest source of catastrophic losses in retail trading.
In depth
Detected statistically by clustering: trades within minutes of a loss, with size 2x+ baseline, and stops 50%+ tighter than usual. It's the most predictable failure pattern in retail data.
Related terms
Tilt
An emotional state (borrowed from poker) where rational decision-making breaks down after a loss or frustration. Tilt is behind most revenge trades and oversized positions.
Overtrading
Taking more trades than the strategy signals, often driven by boredom, revenge, or FOMO. Dilutes edge and inflates commission/spread costs. A leading cause of prop firm failures.
FOMO (Fear of Missing Out)
An emotional state where a trader enters a position because the market is moving without them, rather than because of a valid signal. A leading cause of late, oversized, and poorly-timed entries.
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