It is better to learn from the mistakes of others than to fill the bumps yourself. That is why I am talking about the problems that I faced myself and which I (to my great joy) managed to overcome.
The second goal is to show that we are all real people, and everyone has emotions, complexes and mistakes. It’s just that some can beat them and stay in the market, while others give up and leave. But here the question is, what is the core of whom!
Nobody will do this part of the work for you, no matter what the sellers of courses on the psychology of trading say. You can highlight the problem, show the ways to solve it, but the result depends only on you …
This concludes my lyrical introduction and move on to the heart of the matter.
What is vengeance trading?
Imagine this situation… Beautiful sunny day, morning. The mood is the bomb! You open your computer and run a trading program to do your homework and analyze the market.
On one of the currency pairs, a picture is drawn exactly like in books on technical analysis and which exactly matches your trading system. “This is happiness!” – you think. As a disciplined trader, you draw up a trading plan by marking your entry point, stop level and profit-taking. Place pending orders and patiently begin to wait for the implementation of the intended scenario.
The price is almost point to point, activates your order and goes in the direction you need. “How cool I am!” – mentally praise yourself. The wonderful “deal of the century” is starting to loom on the horizon and in your head! You close the terminal, why should you stare? The question of achieving profit is a matter of time, well, in any case, it seems to you at that moment, and you go to do other things. After a couple of hours, you decide to check and make sure that a round amount of profit has been added to your account after the profit is triggered.
You find that the price, before reaching your profit, quickly reversed and broke your stop. How so? After all, I calculated everything correctly, did everything right, but I was fooled, robbed and robbed. And who? This stupid market with its fat guys, manipulators and market makers. You are overwhelmed with frustration, anger, anger and a burning desire to fix everything as soon as possible, playing back the loss. Now I will quickly roll over, average, reopen with a double lot (a lot of variations!) And get back my losses. You roll over, average, reopen and get even bigger loss!
This is the situation called trade for revenge.
How to beat the trade out of revenge?
Reread the epigraph to this article again. Pain, namely the pain of loss, pushes us to do something stupid in the market. This is a stronger and more lasting feeling than high and euphoria.
If you get your finger caught in the door, it will hurt for days. But this does not mean that in revenge one must immediately grab the ax and chop down the door, or even the finger. I hope you don’t come up with a more radical idea – to cut off your hand instead of a finger, so that the finger hurts less. So why should the market be any different? Who is our doctor that we stuck our fingers in the door at the moment when someone was closing it?
I deliberately thickened the colors, since we have a surgery department here, not a massage room.
Therefore, there is only one advice:
Received a stop – stop trading on this pair for 1-2 days, calm down and cool down. Do not let anger and desire for revenge take over common sense and a bright mind. Otherwise, “in a fever” and out of anger, you can heap up such things that you won’t get through in a month. This is a difficult task! But who said it would be easy?
On this for today, let me take my leave. And next time we’ll talk about trading out of boredom.