Table of Content
Table of Content
Greed In Forex- One of The Deadly Sins of Trading
Many of traders and their accounts have suffered greatly because of greed. This is in reference to the classic saying “Bulls and Bears make money pigs get slaughtered”. In terms of animals a pig is an embodiment of greed and especially in the business of trading, the markets, market makers (brokers) show no mercy to these type of traders.
The Oxford dictionary’s definition of greed is stated as “Intense and selfish desire for something, especially wealth, power..” Does that sound somewhat familiar?
The main reason why people trade the markets is the scope making massive profits by rising a fraction of capital through high leverage instruments. Our desire as traders is to amass attractive returns, but the desire becomes unhealthy – even dangerous – when it becomes EXCESSIVE!
Through extensive study in behavioural science of traders, the two most common and dangerous emotions found in traders were fear and greed. Fear stems further stems to indecisiveness can paralyze you and hold you from trading (fear of losing), but your capital is maintained for as long as you keep your trigger the buy or sell button. On the other hand, greed PUSHES you to act, in ways and at times when you shouldn’t think and that is why it is so dangerous.
Greed can prompt you to act unreasonably. This usually comes by the way of many actions such as fear of missing out on a trade, overleveraging, overtrading, chasing the markets or even holding onto your traders for too long past your exit levels.
When you think about it, greed is not that different from alcohol. It can make you act foolishly when you have too much of it in your system. When it comes to the point that greed clouds your trading judgment, you are particularly drunk with it.
What’s the antidote to Greed?
Like many other worthy endeavours, overcoming greed requires a lot of struggle, patience and discipline. It is probably the most difficult emotion to deal with because when one sees the reward and continuous wins, a lot of restraint and discipline is required to step away from the screens and markets. You will have to accept and admit that you won’t make the right call every time. It is all a matter of taming the ego.
When you accept that the market is higher than you and you are bound to make mistakes, then you will be extra focused on following your trading plans instead of succumbing to greed.
Don’t be a pig and you won’t get slaughtered.