Loss Chasing
Loss chasing is raising risk to win back losses quickly — larger positions, lower-quality setups or extra trades. It is closely related to revenge trading and often turns a bad day into a disastrous one.
After a loss, the urge to win it back fast is strong. Loss chasing means acting on that urge — bigger size, weaker setups, more trades. Each step raises risk exactly when judgement is worst, which is how a normal losing day becomes a disaster.
- Reading time
- 3 min
- Also called
- Chasing losses, Getting even, Doubling down
- Updated
Loss chasing in plain words
Revenge trading is the urge to win back losses fast with extra trades — often bigger and less carefully chosen.1
A revenge trade aims to win back one particular loss, not to take a setup the market offered; position size rises as trade quality falls.2
After a bad run, the best move is to stop and take a break, even if only for a few days.3
How to stop chasing losses
Set a hard daily limit
Use Daily and Weekly Loss Limits set in advance.
Check your reason
Check your reason: if it refers to the last loss, skip the trade.2
Pause after big losses
Step away; IG suggests taking a break first.3
Keep risk fixed
Never raise Risk per Trade to recover.
Return smaller
IG suggests trading smaller sizes until confidence returns.3
Log it
Tag chasing trades in your Trading Journal.
Worked examples
Example 1 — The spiral
Day wreckedA hypothetical trader loses 1R, then doubles size twice to win it back.
| First loss | −1R |
| Second trade | −2R |
| Third trade | −4R |
Size went up while setup quality went down, turning a normal loss into −7R.2
Example 2 — Limit holds
Damage cappedA hypothetical trader hits a −3R daily limit and closes the platform.
| Daily loss | −3R |
| Extra trades | 0 |
Taking a break to stop the losses kept a bad day ordinary.3
Example 3 — Smaller restart
RecoveryAfter a drawdown, a hypothetical trader returns at half size for ten trades.
| Size | 0.5R |
| Ten-trade result | +2R |
Trading smaller sizes until confidence returned rebuilt the account calmly.3
Loss chasing vs normal trading
| Aspect | Loss chasing | Normal trading |
|---|---|---|
| Reason for trade | Recover the last loss | Setup meets the plan |
| Position size | Rising | Fixed by rule |
| Setup quality | Falling | Consistent |
| Typical outcome | Larger losses | Planned risk |
When to watch for it
After a big loss
The urge peaks right after.
Near a daily limit
Temptation to 'get back to even'.
Leveraged products
Leverage makes chasing faster and costlier.
Fast markets
Day Trading and Scalping allow rapid revenge trades.
Advantages and disadvantages
Advantages
- Spotting it early limits damage.
- Hard limits remove the choice.
- Fixed risk protects the account.
- Breaks reset emotions.
Disadvantages
- The urge is strong and fast.
- Limits can feel restrictive.
- Hard to admit in the moment.
- Leverage magnifies every chase.
Going deeper
Read as far as you need. Each level builds on the one before it.
What drives it
Beginner
CMC Markets links it to frustration and the impulse to recover losses quickly with larger sizes or lower conviction.1
The pattern
Intermediate
Alpari describes the loop in which position size increases while setup quality decreases, the opposite of a sensible process.2
Recovery
Advanced
The sooner you notice you are trading badly, the less damage you do; come back later with smaller size.3 See also Tilt and Risk of Ruin.
Common mistakes
Doubling size
Raises Risk of Ruin.
Lowering standards
Any setup becomes 'good enough'.
No daily limit
Nothing stops the spiral.
Trading straight after a loss
No cooling-off.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Chasing raises risk at the worst time.
- Size up, quality down is the pattern.
- Use hard daily limits.
- Take a break after big losses.
- Return with smaller size.
Frequently asked questions
Is loss chasing the same as revenge trading?
How long should I pause?
Can I ever increase size after a loss?
Further learning
- Tilt
The emotional state behind chasing.
- Daily and Weekly Loss Limits
Your circuit breaker.
- Risk of Ruin
Why chasing is dangerous.
- Risk per Trade
Keeping size fixed.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- CMC Markets. Trading psychology explained: The mental side of trading (opens in a new tab) Checked .
- Alpari. Revenge trading: what it is and how to stop (opens in a new tab) Checked .
- IG. Managing success and failure (opens in a new tab) Checked .
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. We are not affiliated with any publisher linked above. Last reviewed . Report an error or request a source credit.