Do You Revenge Trade?
- Posted by Greg Harmon
- on September 19th, 2013
Revenge is something that everyone can understand. Someone gets the better of you and you immediately think about how to get revenge. There is revenge in the workplace, revenge in politics and even revenge sex. But is there a place for a revenge trade? I find myself in that situation right now. Having put on a trade in Fedex for earnings, a September 110/107 1×2 Put Spread (fancy lingo for a bearish trade), I have one more day for Fedex to fall below 110 or I lose the enter premium paid. This is not going to happen. My total cost was only 17 cents per contract, so it is not a lot of money, but I immediately feel I need revenge. I have devised a trade to get all of my money back, selling an October Put Spread, but this does not make any logical sense.
I have a process. I look at 1000′s of charts every week to try to find the best trade set ups. Why circumvent that process so that I can get revenge on Fedex? By the way, this is a stock, not a person. It does not care whether I win or lose. It will not feel punished when I do a fist pump. Also, what difference does it make if I win on some other stock instead? money is money. And another stock may actually fit my process.
Come to think of it, revenge trading is just stupid. It shows a lack of discipline and control over your emotions. Do not let that happen to you.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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