Revenge Trading

 
"Revenge is a dish best served cold."

This week was kind of a roller coaster week.  I didn't make any big moves, but I did do some daytrading and I had a bad stretch from late Wednesday to early Thursday.  I was caught short and was trying to rationalize my position in the face of relentless overnight upward pressure in the futures.  I got out of my position early in the US session on Thursday because the market was stronger than it should have been after staying strong on Fed day the previous session.

Actually cutting the loss on Thursday would have been difficult for me to do perhaps a couple of years ago, when I probably would have just cannonballed (averaged up) on the short and pray for a reversal.  But I listened to my gut Thursday and got out.

Afterwards, I felt a strong need for revenge.  To get back my loss.  That feeling didn't go away.  The only way to get rid of that feeling was to make back my money that I just lost.  Personally, I have a very strong need for getting my money back right after I lose it, even if the opportunity isn't really there.  I will often force the issue.  Sometimes it works out, and sometimes I just dig myself a bigger hole and go into despair.  I would have wanted to get short again at higher prices, like 1200, 1203, or whatever on Thursday even on a mediocre setup just for a chance at getting my money back.  I resisted the temptation but the feeling remained.

I had to wait a day to get revenge.  I did get some revenge, as I was able to catch some downside on a daytrade short on Friday, where the risk reward was decent after 2 up days and persistent weakness midday. 

The point I'm trying to make is this.  You don't need to take revenge right away.  Also feeling a need for revenge while trading is not a bad thing.  But there is no need to rush.  The market will always be there.  Having the need for revenge and making your money back is a good thing as long as it isn't acted on hastily.  It is good motivation to look aggressively for setups and to work harder.

My best trading in the past has always been after deep drawdowns where I felt a strong need to get my money back.  Those are the times when I am the most motivated.