Revenge Trading: A Case Study in Setting Money on Fire

Right. Let me tell you about Marcus.

Marcus wasn’t stupid. He had a degree in finance, a subscription to three different trading education platforms, and a YouTube channel with 12,000 followers who thought he was the second coming of George Soros. He also had a MetaTrader terminal that he checked approximately 847 times per day—which, spoiler alert, doesn’t improve your trading results.

One Tuesday morning in March, Marcus sat down at his desk with a double espresso and what he believed was a “surgical” EUR/USD setup. According to his analysis (which was, let’s be honest, just him squinting at a chart for eight minutes), the pair was “clearly” heading for a 200-pip move.

It wasn’t.

By 10:47 AM, he’d lost £3,000. His stop loss was hit. His thesis was wrong. And more importantly—and this is the bit that matters—his ego was absolutely demolished.

The Moment Everything Goes Wrong

Here’s the thing about losing money in trading: it stings. But it’s supposed to. A £3,000 loss should be like a slap in the face. It should make you step back, review what went wrong, close your laptop, and go for a long walk.

Marcus didn’t do any of that.

Instead, he made a cup of tea (the British equivalent of chugging an energy drink), opened his trading journal, and decided that the market had personally wronged him. That stop loss? Clearly the market was trying to take him out. That losing trade? Obviously, the setup was right—he just needed to get his money back right now.

By 11:15 AM, he was already in another position. Twice the size. In a different pair, but with half the analysis and all the anger. This is what we call “revenge trading,” and it’s basically the financial equivalent of getting dumped and immediately buying a sports car you can’t afford.

The market, indifferent as ever, took that trade out by lunch.

Another £4,500 gone.

The Psychological Cascade

Now here’s where it gets properly depressing.

After two losses totalling £7,500 in ninety minutes, most rational humans would either:

Stop trading
Take a break
Have a serious conversation with their accountant

Marcus, however, had entered what I call “the void”—that headspace where you’re no longer trading with your brain, but with your wounded pride. He was down nearly £8,000. To him, this wasn’t a market problem anymore. It was a personal problem. And personal problems, in his view, required immediate rectification.

Wednesday brought a 6:1 leveraged position on GBP/JPY. Thursday saw him blow through £15,000 on three back-to-back scalp attempts on the DAX. Friday? Friday, he wasn’t even looking at the fundamentals anymore—he was just throwing darts at the board.

By the time Friday’s close came around, Marcus had transformed a manageable £3,000 loss into a catastrophic £47,000 bleed.

His account was suspended. His wife found out. His YouTube followers were asking where his “market update” had gone. (Spoiler: it was because he was sitting in his kitchen, staring at nothing.)

Why This Happens (And Why It Will Happen to You)

The thing about revenge trading is that it’s not a strategy—it’s a symptom. It’s the financial manifestation of what psychologists call “loss aversion”—our tendency to feel the pain of losses roughly twice as strongly as the pleasure of gains. Combine that with ego, and you get a cocktail that’s more toxic than a Canary Wharf bar on Friday night.

When Marcus lost that first £3,000, his brain did what all brains do: it started looking for ways to undo the loss. Not learn from it. Not accept it. But literally reverse time and make the painful thing disappear.

The market doesn’t care.

The market will absolutely abuse this instinct.

The Calculator Nobody Uses

Here’s what I always tell traders: grab a position size calculator. Actually use it. Print it out. Stick it on your wall. Because the moment you start trading revenge, you’re abandoning every sensible rule you ever learned.

If Marcus had taken sixty seconds to use a proper risk calculator on that second trade, he would’ve seen immediately that a 2x-sized position after a major loss was mathematically stupid. But revenge traders don’t calculate. They feel. And feelings make for spectacularly poor portfolio management.

The irony? The answer to every revenge trading situation is embarrassingly simple:

Don’t trade angry. Don’t trade revenge. Don’t trade after losses.

Take a break. Walk. Breathe. Have a biscuit. Do literally anything except log back into your trading platform.

The Only Moral That Matters

Marcus eventually recovered. It took two years and significantly more careful position sizing. He still has his YouTube channel, though his followers dropped by about 8,000 (turns out people don’t enjoy watching someone explain how they yeeted nearly fifty grand into the void).

The lesson here isn’t “never lose money”—if you’re trading, you will. The lesson is that a £3,000 loss can become a £47,000 loss in about 72 hours if you let your wounded ego do the steering.

Your biggest enemy in forex isn’t the market. It’s not even the spreads or the slippage or the weekend gaps. It’s the trader sitting across from the screen, convinced that this time they’re going to get their money back.

They’re not. Not today. Not like this.

The market will be there on Monday. Your account might not be.

Don’t be Marcus. Actually, do be Marcus—but be Marcus on Wednesday, after he’s learned his lesson, not Marcus on Tuesday at 11:15 AM fuming into his cold cup of tea.

Now go calculate your position size. Properly this time.

Have you fallen into the revenge trading trap? Tell me about it in the comments. Or don’t. I’ve heard enough war stories.