Revenge... Everyone knows this where you feel there is an unfair situation that happens to you that is caused by something or someone, and then we kind of have an urge to retaliate against that situation to turn over the table and simply to change into what we think should be just like when you see Sasuke from Naruto anime holds a grudge against Itachi. So, how does revenge related to trading, and how does revenge ruin traders' trading plan? Well, you will see it below here.
Revenge Trading
In our life revenge is a normal trait of humans in which revenge can make humans "satisfy" for a short period of time for those who have successfully done revenge. However, most of them end up regret of what they did and "hope" that they can turn back the time again. Ian McKee said that vengeful people tend to be motivated by power, authority, and desire for status where they do not want to lose face (Michael, 2009).
This is true as I have experienced it myself during my first year of trading, I recall myself having this kind of trait which made me feel frustrated about the result that eventually ignited my anger and I talked to myself "I do not want to lose". After that, I burst out by opening a position again and again until my forex account hit margin call. After I hit margin call, I felt strong regret for what I did and wish to be able to turn back the time.
In trading, it is called revenge trading because there is a psychological pressure that forces you to make an irrational decision which is based on your emotion which is mostly anger and pride which ignites a denial state in yourself and makes you decide something irrational.
Wrath And Pride Of The 7 Sins
In my experience and my point of view, the wrath and pride of the 7 Sins are linked to placing your psychological conditions into a revenge state. As I told you about my experience under the section of Revenge Trading, I recognize that wrath and pride led me into a revenge state where I did not accept the result of the trades and made me do something irrational.
To understand this wrath and pride, let us dig deeper into the definition of those two. Wrath according to Merriam-Webster is strong vengeful anger whereas pride is defined by Dictionary as the satisfaction that you feel as you think your opinion is superior. From those two definitions if we connect it with trading means that wrath throws you into a denial state because it does not meet your expectation and pride makes you think that you are superior to the financial market.
Those two sins eventually hinder you from executing your "perfect" trading plan which throws your trading plan into ruin and not only ruins your trading plan but also can ruin your personal life such as bad relationships that are caused by your wrath and pride, for example, you disappointed with your friend because of a certain event where you feel wrath in your vein and then you do not want to solve the problem which is caused by your pride where you think that your paradigm is always "right". Eventually, you will lose that person as a friend.
Conclusion
No matter how you carefully devise your "perfect" trading plan, if you still cannot manage your emotion, especially anger/wrath and pride then your trading plan will move from hero to zero as it will be useless just like a blueprint with no proper action will create something that is completely different than the original blueprint. That is why if you want to do revenge trading after you devise your "perfect" trading plan, you should take a deep breath first or stay away from the market and make a decision after you calm yourself down.
Written by Andre I.
References
Dictionary. pride. Retrieved from Dictionary (Accessed June 19, 2022): https://www.dictionary.com/browse/pride
Merriam-Webster. wrath. Retrieved from Merriam-Webster (Accessed June 19, 2022): https://www.merriam-webster.com/dictionary/wrath
Price, Michael. 2009. Revenge and the people who seek it. Retrieved from American Psychological Association (Accessed June 19, 2022): https://www.apa.org/monitor/2009/06/revenge