Revenge Trading: How to Spot It in Your Trading Journal

Revenge trading is taking a trade to win back a loss rather than because your setup is there. It rarely feels like a decision. It feels like urgency: the market "owes" you, the next entry is obvious, and the size goes up because one good trade would fix the morning.

This guide is for discretionary traders — stocks, futures, forex, crypto, prop-firm challenges — who log their own trades. It does not cover automated systems, where the sizing rule is in the code, or the deliberate scaling plans some traders use (we come back to those at the end). The point is practical: revenge trading leaves fingerprints in a trade log long before it shows up as a blown account, and you can learn to read them.

The evidenceProfessionals do it too

The pattern is not a beginner's flaw. Joshua Coval and Tyler Shumway studied proprietary traders at the Chicago Board of Trade and found them "highly loss-averse, regularly assuming above-average afternoon risk to recover from morning losses" (Journal of Finance, 2005). The losing traders also bought at higher prices and sold at lower prices than before — their chase trades were worse trades, not just bigger ones.

That second finding matters as much as the first. Doubling your size after a loss is dangerous on its own; doubling it on trades you would not have taken in a calm state is how a good strategy turns into a bad year.

The mathWhat "double after two losses" does to a winning strategy

Take the strategy from our risk of ruin guide: 45% winners paying 1.2R to 2.0R, losers at −1R — a real edge of +0.17R per trade. Risk 1% of the account per trade for 250 trades, about a year. Then compare two habits that start after two losses in a row:

The middle row is the trap, and an experienced reader will spot it at once: with a genuine edge and the same trade quality, chasing raises the median year. That is exactly why the habit survives — it pays often enough to feel smart. The price is in the tail: a median drawdown of 39% and better than a one-in-five chance of losing half the account in a year. And the middle row is the optimistic case. If the chase trades are worse trades, as the Chicago data suggests, the median year collapses to +9.6% and losing half becomes more likely than not.

The drawdown arithmetic behind those numbers is the same one in what drawdown is normal: a 39% drawdown needs a 64% gain just to get back to even.

The fingerprintsFour signals a trade log can show

Revenge trading is a state of mind, but it changes four things you already record. None of them proves a single trade was revenge; together, over weeks, they show the pattern.

• Time. A new entry within a few minutes of a stop-out is the clearest single signal. Planned setups rarely appear on demand.
• Size. Risk that jumps to 2× or 3× your normal 1R right after losses is the habit in the table above.
• Pace. More trades per hour after a loss than on a normal day — the "I need to get it back before lunch" rhythm.
• Rules. Stops left out, a skipped pre-trade checklist, a daily loss limit crossed. Revenge trades are usually the ones that break your own rules first.

A morningWhat it looks like in the journal

Here is one morning on a $25,000 account where 1% — $250 — is the normal risk:

In the Trading JournalWhere to look

The Trading Journal does not label a trade "revenge" for you — it cannot know what you were thinking. What it does is keep the fields the four signals come from and grade your history against your own rules. To make the signals visible:

1. 01Log entry and exit with the time, not just the date. The by-hour chart and any time-gap check need intraday times; imports with dates only are flagged as such.
2. 02Record the risk. Fill risk % or 1R (or a stop, from which 1R is derived). The trader portrait's Sizing axis then shows how steady your size is, measured within each asset class — a jumpy score is a sizing habit to look at.
3. 03Switch on the rules you mean to keep. The Discipline section grades every trade you have ever logged, not just new ones: Max risk per trade, Daily loss limit, Max trades per day, Every trade has a stop and Pre-trade checklist used. Recent breaks lists the trades and days that crossed a line, which is where revenge trades tend to collect.
4. 04Tag the trades you took to win something back. Be honest in the moment — a tag like after-loss costs two seconds. After a month, the tags chart shows what those trades earned against everything else.
5. 05Check the minutes-since-loss signal in a spreadsheet. The journal shows your longest losing streak and drawdown on the dashboard; for the exact gap between a loss and the next entry, export the trades to CSV and subtract the times.
6. 06Ask the AI analysis. It reads your logged trades; ask it directly whether your size, pace or results change after losses — then check what it says against the trades themselves.

If you are new to keeping a log, start with how to keep a trading journal; sizing itself is covered in how much to risk per trade.

PreventionRules that take the decision away

The other sideWhen bigger size is not revenge

Not every size increase is a problem. A trader who adds to a winner by plan, raises 1R once the account has grown, or uses a written rule to scale up after a profitable month is sizing by plan. The difference is timing and source: revenge sizing rises after losses, during the session, and comes from emotion rather than a rule written beforehand. If your size goes up after wins and down after losses, the journal will show the opposite pattern from the one in this guide — that is a deliberate choice, not a leak.

Likewise, a fast re-entry is not always revenge. A breakout that fails and re-triggers a minute later can be a valid setup. That is why one signal proves nothing; it is the combination — fast, bigger, more often and against your rules — that does.

Frequently asked questions

What is revenge trading?

It is placing a trade to recover a loss rather than because your setup is present. It usually comes with larger size, faster entries and broken rules right after one or more losses.

How can I tell if I am revenge trading?

Look at what happens after your losses: how many minutes pass before the next entry, how your risk compares with your normal 1R, how many trades you take in the next hour, and how often your own rules are broken on those trades. If all four rise after losses, the pattern is there.

Can doubling size after losses work?

With a real edge and unchanged trade quality it can raise the typical year — in our simulation the median went from +49.6% to +108%. It also raised the chance of losing half the account in a year from almost zero to 21.7%, and to 55.5% when the chase trades were worse trades. It is a bet on never meeting a long streak, and long streaks are close to certain over a year.

How do I stop revenge trading?

Take the decision away from the moment: a hard stop after a set number of losses, a cooldown after each loss, size fixed before the session and a daily loss limit enforced by your broker or prop firm. Then check in your journal whether you kept those rules.

Where these numbers come from

The simulation is synthetic and seeded, so anyone can rerun it: 20,000 years of 250 independent trades, 45% winners paying a uniform 1.2R–2.0R and losers at −1R (expectancy +0.17R), risk sized as a percentage of the current balance. "Chase" sizing doubles the risk on the next trade after two losses in a row and keeps doubling while the streak lasts, capped at 8%; the "worse trades" row lowers the win rate of those chase trades to 38%. That 38% is our assumption — chosen to illustrate the Coval and Shumway finding that loss-chasing trades are taken at worse prices, not a figure from their paper. Real trades are not independent and real streaks cluster, which makes long streaks — and the damage in the chase rows — more likely than shown, not less. The worked morning is an example, not a real account. All code is in drafts/revenge-trading-numbers.mjs.