Day traders typically suffer severe financial losses in their first months of trading, and many never graduate to profit-making status. Given these outcomes, it's clear: day traders should only risk money they can afford to lose. They should never use money they will need for daily living expenses, retirement, take out a second mortgage, or use their student loan money for day trading.
Revenge trading starts or is triggered by an initial relatively large loss. After that loss, the trader starts to overcome the big loss with larger trades or multiple poor trades, which only makes things worse. What could have been an isolated loss ends up becoming a catastrophic drawdown or margin call.
Trader Beware: How To Avoid Catastrophic Losses While Trading Online
Revenge trading is one of the most common and devastating behaviors traders can experience. It will more likely present itself after a big loss or a losing streak, leading traders to increase position size and the number of trades taken. All traders will most likely experience it at least once, so make sure you identify it once it gets to you. In that way, you will be able to prevent it from damaging your account, and avoid it in your trading performance. 2ff7e9595c
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