FOMO and revenge trading

Two trades have no setup: the one taken because the move was running away, and the one taken because the previous trade lost.

Chasing

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The same move, entered twice. One entry has a plan; the other has a feeling.

FOMO is entering because price is moving, not because a setup is there. The chased entry is always worse than the planned one: further from the logical stop, closer to the target, and taken when the first wave of buyers is about to take profit.

Revenge

Revenge trading is the trade taken straight after a loss to win the money back. It is usually larger, usually faster, and usually in the same pair “because it owes me”. It has no setup; it is driven by the loss.

Try it

What would you do?

You were stopped out of EUR/USD ten minutes ago for −1R. Price has now reversed and is moving the way you expected. You feel it owes you. What do you do?

Re-enter now at larger size to recover the loss quicklyRe-enter at normal size, since you were right about directionStep away for fifteen minutes, then look for a new setup as if the first trade never happened

Notice how the right answer involved not trading for a while.

Two rules worth writing down

• Missed it? Missed it. No entries more than a set distance from the planned level. The next setup is the next trade.
• After any loss, a pause. Fifteen minutes away from the screen, minimum. After two losses, done for the day.

Quick check

1. Question 1 of 3

   Why is a chased entry worse than the planned one?

   AIt is further from the logical stop and closer to the target, so the ratio is poorBBecause late entries are illegalCIt is not worse, only later

Go deeper: FOMO in trading · Revenge trading