“A greedy person and a pauper are practically one and the identical.”
The Swiss proverb above couldn’t be more true for us traders. As chances are you’ll know, many forex traders (and their accounts) have suffered due to greed. Actually, that is how the saying “Bulls and bears earn a living; hogs get slaughtered” got here about.
No other animal embodies greed higher than the hog, and within the trading business, the markets show no mercy to hogs.
What’s greed?
The Merriam-Webster definition describes greed as “a selfish and excessive desire for more of something (as money) than is required.” Sound familiar?
Let’s face it, it’s our desire to accumulate handsome returns that drives us to trade, but this desire becomes unhealthy–even dangerous–when it’s EXCESSIVE.
That’s the reason greed is commonly considered essentially the most dangerous emotion for traders; even worse than fear.
Fear can paralyze you and keep you from trading, but your capital is preserved for so long as you retain your hands in your pockets.
However, greed PUSHES you to act, in ways and at times while you shouldn’t; that’s why it’s dangerous.
The hazards of greed
Greed prompts you to act irrationally. For traders, this normally is available in the shape of overleveraging, overtrading, chasing the markets, or holding on to trades you realize it’s best to’ve exited way back.
When you concentrate on it, greed is just not that different from alcohol; it could make you act foolishly when you’ve got an excessive amount of in your system. With regards to a degree that greed clouds your trading judgment, you’re practically drunk with it.
Overcoming greed
Like many other worthy endeavors, overcoming greed requires numerous effort and discipline. It isn’t easy, but it could be done. It’s all a matter of taming your ego.
You’ll have to confess and accept that you just won’t make the appropriate call each time.
There will likely be instances while you won’t catch the market’s full move or times while you will miss a pleasant setup altogether.
But that’s just how trading goes. Once you accept that the market is greater than you and that you just’re certain to make mistakes, then you definately’ll be more focused on following your trading plans as an alternative of succumbing to greed.
Lots of successful forex traders have said that they’d relatively be lucky than good. For them, it’s higher to attribute success to luck than their very own skills.
It won’t be good for the ego, nevertheless it’s definitely good on your trading psyche. And that’s probably certainly one of the secrets of trading.
Don’t be a hog and also you won’t get slaughtered.