Several traders and their accounts have suffered because of greed. In fact, this is how the saying “Bulls and bears make money; hogs get slaughtered” came about. No other animal embodies greed better than the hog and in the trading business, the markets show no mercy to hogs.
The Merriam-Webster definition of greed is “a selfish and excessive desire for more of something (as money) than is needed.” Sound familiar?
Let’s face it, it’s our desire to acquire handsome returns that drives us to trade, but this desire becomes unhealthy–even dangerous–when it is EXCESSIVE.
That is why greed is often considered 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 as long as you keep your hands in your pockets. On the other hand, greed PUSHES you to act, in ways and at times when you shouldn’t; that’s why it is dangerous.
In particular, greed can prompt you to act irrationally. For traders, this usually comes in the form of overleveraging, overtrading, chasing the markets, or holding on to trades you know you should’ve exited long ago.
When you think about it, greed is not that different from alcohol; it can make you act foolishly when you have too much in your system. When it comes to a point that greed clouds your trading judgment, you are practically drunk with it. Like many other worthy endeavors, overcoming greed requires a lot of effort and discipline. It isn’t easy, but it can be done. It’s all a matter of taming your ego.
You will have to admit and accept that you won’t make the right call every time. There will be instances when you won’t catch the market’s full move, or times when you will miss a nice setup altogether.
But that’s just how trading goes. When you accept that the market is bigger than you, and that you’re bound to make mistakes, then you’ll be more focused on following your trading plans instead of succumbing to greed.
A lot of successful traders have said that they’d rather be lucky than good. For them, it’s better to attribute success to luck than their own skills. It might not be good for the ego, but it’s definitely good for your trading psyche. And that’s probably one of the secrets of trading. Don’t be a hog and you won’t get slaughtered.
The Merriam-Webster definition of greed is “a selfish and excessive desire for more of something (as money) than is needed.” Sound familiar?
Let’s face it, it’s our desire to acquire handsome returns that drives us to trade, but this desire becomes unhealthy–even dangerous–when it is EXCESSIVE.
That is why greed is often considered 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 as long as you keep your hands in your pockets. On the other hand, greed PUSHES you to act, in ways and at times when you shouldn’t; that’s why it is dangerous.
In particular, greed can prompt you to act irrationally. For traders, this usually comes in the form of overleveraging, overtrading, chasing the markets, or holding on to trades you know you should’ve exited long ago.
When you think about it, greed is not that different from alcohol; it can make you act foolishly when you have too much in your system. When it comes to a point that greed clouds your trading judgment, you are practically drunk with it. Like many other worthy endeavors, overcoming greed requires a lot of effort and discipline. It isn’t easy, but it can be done. It’s all a matter of taming your ego.
You will have to admit and accept that you won’t make the right call every time. There will be instances when you won’t catch the market’s full move, or times when you will miss a nice setup altogether.
But that’s just how trading goes. When you accept that the market is bigger than you, and that you’re bound to make mistakes, then you’ll be more focused on following your trading plans instead of succumbing to greed.
A lot of successful traders have said that they’d rather be lucky than good. For them, it’s better to attribute success to luck than their own skills. It might not be good for the ego, but it’s definitely good for your trading psyche. And that’s probably one of the secrets of trading. Don’t be a hog and you won’t get slaughtered.
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Japanese Yen trades just shy of 157.00 versus the USD
The Japanese Yen weakens across the board after BoJ announced its policy decision. A shortlived spike in the Yen may be testament to an attempt by the Japanese authorities to intervene. US PCE Price Index shows higher-than-expected inflation but does little to impact USD/JPY which almost touches 157.00.
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.
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