Revenge trading is an emotional pattern in which a trader takes new risks mainly to recover a recent loss quickly. Frustration can replace the original decision process, leading to larger positions, more frequent trades, or abandoned exit rules.
The previous loss changes the next decision
A trader might increase leverage immediately after a stopped-out position because a larger win would restore the account balance. The earlier loss, however, does not make the next trade more likely to succeed. Larger exposure can increase both possible gains and further losses, while additional trades add costs.
For example, assume an account falls from 1,000 to 800 units with no deposits or withdrawals. That is a 20% loss; recovering to 1,000 requires a 25% gain on the remaining 800, before further costs. The arithmetic describes the changed starting balance, not a reason to increase risk.
Recognizing the pattern
A quick trade after a loss is not automatically revenge trading. The key question is whether emotional pressure displaced the reasons and risk limits that would otherwise govern the decision.
Predefined limits, breaks, and a record of trading decisions can help identify this shift. They do not guarantee profits or make an unsuitable position safe. Revenge trading is a behavioral description, not a clinical diagnosis.