Trading Psychology – Greed
In the years I’ve been trading and training others, I can see clearly that Trading Psychology is the most important determining factor in the success of an individual trader. My focus ios on the highly leveraged Forex Market, and I have recognized many of the aspects of Greed & Fear that keep people form realizing their dreams in trading on their own.
I have found that there are both good and bad points to greed and fear. Fear is not always a bad thing, fear of heights keeps you from falling of buildings, however you can have too much of a good thing.
In this 2 part article I will list the pro’s and con’s of Greed and Fear while trading the forex market, starting with Greed.
Good Greed:
- Keeps you in winning trades
- Keeps you trading when you are in the zone
- Keeps you learning, studying and focusing on fine tuning your strategies and styles
- Gives you persistence in trading even after you have blown up an account
- Gets you involved in the FOREX market in the first place
Bad Greed:
- Keeps you in losing trades far too long
- Keeps you from locking in profits on a winning trade.
- Makes you ignore your money management, and “bet the farm”
- Gives you un-realistic expectations of returns on your time and money and create a money management plan that is certain to blow up your account
- Keeps you from using stop losses, without stop losses you can easily increase your winning percentages, but your losers will wipe out any profits over time.
These are just some of what I have noticed as the good and bad elements of greed and fear when trading forex. Stay tuned for the next Trading Psychology issue focusing on Fear.
Let me know if you have any to add to this list.
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Rather interesting. Has few times re-read for this purpose to remember. Thanks for interesting article. Waiting for trackback