What is revenge trading?
Revenge trading is a term used to describe the act of retaliating against an attacker or opponent in the markets. It can involve buying or selling shares to inflict financial damage on the person or organisation that initiated the attack.
Revenge trading is most common in Asia, where investors often react to negative news stories. The practice can be hazardous, leading to sharp price fluctuations. And market volatility. In some cases, revenge trading can also trigger a panic sell-off.
Why do traders use revenge trading?
If you’re like most people, the thought of taking revenge on an enemy probably sounds pretty appealing.
Revenge trading is a form of retaliation in the financial markets. It often refers to the buying or selling securities to inflict losses on an opponent who has previously inflicted losses on the revenge trader.
Revenge trading can also refer to any aggressive behaviour motivated by a desire to punish someone who has hurt you financially. Revenge trading can also take advantage of price movements caused by emotional responses to news events.
In many cases, revenge trading is fueled by anger, hatred, and jealousy. As a consequence, it can often lead to irrational and destructive decision-making.
These are reasons why people might choose to engage in revenge trading. They may feel that they have been wronged and want to get justice. They may also hope that by damaging their rival’s business, they will gain an advantage over them.
The need to know list
- Revenge trading is standard in Asia, especially in China, Japan, and South Korea.
- In revenge trading, traders attempt to profit from the price movements that result from news announcements or events that they believe will be unfavourable to the target company.
- Revenge trading aims to inflict losses on the targeted company by selling its stock short and buying back the shares once the stock falls in price.
- Revenge trading can be a very profitable strategy, but it also carries significant risk.
- To be successful, revenge traders need to have accurate information about the target company and the news likely to affect its stock price.
- Revenge trading can be very costly if the trade goes wrong.
- Revenge traders need to be very careful when choosing their targets, as picking the wrong company can lead to significant losses.
- You can also manipulate the market by spreading false information about a company.
- In some cases, revenge trading can backfire and result in significant losses for the trader.
- Revenge trading is illegal in some countries, including the United States.
- The practice of revenge trading is controversial, with some people arguing that it is unfair and unethical.
- There are several risks associated with revenge trading, including getting caught by authorities.
- Revenge traders need to be very careful when choosing their targets, as picking the wrong company can lead to significant losses.
- You can also use revenge trading to manipulate the market by spreading false information about a company.
- In some cases, revenge trading can backfire and result in significant losses for the trader.
- Revenge trading is illegal in some countries, including the United States.
- The practice of revenge trading is controversial, with some people arguing that it is unfair and unethical.
- Revenge traders need to be very careful when placing their trades, as even a tiny mistake can lead to significant losses.
- Revenge trading can be a profitable strategy if done correctly, but it is also hazardous.
- To be successful, revenge traders need to understand the news likely to affect the target company’s stock price.
You need to remember that there is no guarantee of success, and it is always important to compare the risks and rewards before taking any action.
So, if you’re thinking about taking revenge on someone in Asia, be sure to familiarise yourself with the local customs and laws first. And finally, be prepared for the consequences – both good and bad.
Link to Saxo for more information.
