Friday, April 13, 2012

The “Revenge” Trading Method

January 3, 2010 by  
Filed under Forex Tips

The revenge trading method is one of the easiest trading strategies all traders will definitely know and it has a very high losing accuracy. You did not see wrongly! It is really losing accuracy and not winning accuracy.

Have you ever entered a few lots after you get stopped out by the market hoping to take revenge of the market and get back your losses. However most of the time, the market will continue to stop you out again and again causing you to accumulate larger losses.

Having the revenge mentality in trading is extremely counterproductive for your trading. This is because when you are trading the revenge method, you are actually placing trades based on your emotion and not analysis. This is usually what causes traders to get their account wiped out within a short period of time.

Do not be discouraged when you have consecutive losses because all successful traders will also have times where they will face the problems of having consecutive losses as well. But the difference between those successful traders and those unsuccessful ones lies in their ways of handling losses.

Here are some of the ways you should deal with losses in trading:

1) Stop trading for the Day: If you get stopped out more than 2 times within a day, you should log out of your account and stop trading for day to avoid your emotion from trading.

2) Do not enter any Trades for an Hour: Let your mind rest and calm down before you continue to do your analysis on the chart again.

3) Move To Demo: There are some successful traders who move to their demo account once they find themselves having consecutive losses. This is to help them gain their confidence back before they go back to trade live account.

The above are some ways you can use to prevent yourself from trading the revenge method. This can really determine whether you are going to be successful in trading or not.

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  4. A Lucky Trader Vs A Discipline Trader

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