Trader Mindset

How to own revenge trading


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Has this every happened to you?

You're in a great trade, you have unrealized gains, and you're feeling good about your execution. 

You're about to add to your winner, when the market craps the bed and takes the entire market down so that your gains are wiped out in less than an hour. 

Worse, the market rebounds entirely over the next few days as you watch your former position rally to new highs. 

Do you chase it? Not a good idea. 

Getting back in because you're angry is another form of revenge trading.

If you don't have a bona fide rule for re-entering such a trade, consider looking at reversal patterns.

If your market sells off with the overall market, but rebounds, it might show up as a reversal pattern.

A good one to start with is Victor Sperandeo's "2B Reversal" as depicted in his book "Methods of a Wall St. Master."

You can trade this as a chart pattern or code it into your systematized rules.

 

 

 

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Trader MindsetBy Michael Martin

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