Meaning And Risks Of Revenge Trading (2024)

FAQs

Meaning And Risks Of Revenge Trading? ›

Anything done out of rage or irritation is unlikely to turn out successfully. So, revenge tradingis when you're motivated by anger to pound the market, order after order, in the hopes of recouping earlier losses. The difficulty is that it's your trading capital, not the market, that gets the brunt of the blows.

Revenge trades come in many forms but the most common one is when traders take impulsive (and usually bigger) trades after a particularly frustrating loss in the hopes of making back the money they've lost. Now, this is dangerous for your account because it forces you to throw your trading discipline out the window.

Revenge trading is similar to a condition poker players find themselves in – commonly called being 'on tilt'. Here's an example: a Texas Hold 'Em player goes bust at the end of hand because the opponent drew the exact card they needed on The River (the fifth and final community card in a Texas Hold 'Em hand).

Revenge trading, in essence, is the act of seeking to recover losses incurred from prior unsuccessful trades by taking impulsive and high-risk trades. It's driven by the emotional need to recoup losses, often leading to irrational decision-making and further financial setbacks.

Revenge perpetuates the cycle of pain

Revenge doesn't offer closure. Seeking revenge often leads to a back-and-forth retaliation, causing a never-ending loop of suffering. It's like pouring fuel on the fire of our emotional distress, making it impossible to break free from the negative emotions that bind us.

In fact, it might make you feel worse.

While you might feel hurt or betrayed right now, eventually you will be able to put those feelings behind you, but if you burden your conscience with guilt, you are more likely to ruminate over your actions - this makes moving on much harder and only puts your life on hold.

Toxic Trading is defined as reckless risk-taking, impulsive behavior, and a disregard for fundamental principles. The threat of toxic trading jeopardizes not only individual trader accounts but also the stability of proprietary trading firms.

Rage Trade is a perpetual swap protocol focusing primarily on providing a highly liquid ETH perpetual swap. The protocol was introduced to the market in 2022. It utilizes an innovative concept called “recycled liquidity” powered by Uniswap v3.

This — trading one stock using inside information about another stock — is often called “shadow trading.” Where did the SEC get the idea that Panuwat had a duty to Medivation to keep this information about Incyte confidential? Well, because that was his explicit agreement with Medivation.

In effect, taking revenge may not ultimately be in our best interest overall. The problem is that revenge provides only a short-lived satisfaction. It does not really make up for the suffering we may experience and in fact only prolongs the enduring suffering of the original offense.

What consequences can revenge hold? ›

Consequences of Revenge:

This leads to creating a cycle of revenge that can spiral out of control. Long-Term Effects: It can perpetuate negative emotions and hinder emotional healing. Social Consequences: Seeking revenge can damage one's social relationships.

Abusive Trading means the following actions, but not limited to, pip- hunting, scalping, arbitrage, manipulations or exploitation of any temporal and/or minor inaccuracy in any rate or price offered on the Trading Platform, a combination of faster/slower feeds, use of any robots, spiders or other automated data entry ...

Don't put on trades just to get a thrill. And most importantly, stay rested. Don't trade while you are hungry, tired, overly emotional, or under extreme stress. You have a limited amount of psychological energy, and when it is depleted, you'll have difficulty controlling your impulses.

Highly risky: Volatility and the unpredictability of the market make it highly risky, especially for small-time traders who don't have access to high-quality research. If enough precautions are not taken at the appropriate moment, stock trading can wipe out your entire capital in no time.

Madoff Investment Scandal

Madoff admitted to his sons who worked at the firm that the asset management business was fraudulent and a big lie in 2008. 2 It is estimated the fraud was around $65 billion. 3 Madoff pleaded guilty to multiple federal crimes of fraud, money laundering, perjury, and theft.

The more frequently investors trade, the more time they spend, the greater their transaction fees, and the lower their profits. Financially, day trading is clearly a losing proposition.