Greed – The Enemy of Every Trader
Greed can be defined as ‘Intense or selfish desire for something, wealth, food or power.’ So greed is an emotion? Correct, trading is an emotional game; well actually trading is an emotional war with oneself. So you need to be able to detach yourself from your emotions when trading otherwise the dreaded greed will get you and you shall be on a fast ticket to blowing that bank.
When trading there are always some emotions that will be present, it is human nature these are hope, fear and greed. These emotions are waiting to get to you and ruin your clear thinking plan or trade, controlling these emotions will enable you to be a much better trader, if you let them get to you then emotions like ignorance will take over and you shall find yourself getting greedy on trades and losing money, you have to ask yourself are you doing this for a bit of fun or is this your new career? If so act accordingly, do not worry that taking a smaller more consistent green is boring, it is all part of the long term plan to your ultimate goal, pro trading.
Unless of course you want to be greedy, let those emotions which are the enemy of the trader, greed, ignorance, fear and hope overcome you and win a lot one week and blow everything the next week? Sure that is fun but where does it get you long term?
So what do professionals do differently that the standard trader does not?
Always trade with a plan, they know what they are trading, they know why they are trading it and they know exactly what point they will be opening and closing the trade.
Trade in a rules environment, they have developed their own rules for the way they will trade and they are sticking to them.
They only trade when in a clear mental state, there is no good rushing home throwing the computer on opening the first market and trading it. Get home, have a drink speak with your partner, relax then trade. There will always be another trade.
Focus on the markets; they know exactly what is driving the markets and how to react to these changes.
Trade selectively, we have all been there so excited to get trading we shall do a lay the draw on the Singaporean Sunday pub game because it is the only thing there. Now you must not, be selective trade on value and with a clear mind on the risk and reward.
Losses, professional traders move on quicker from losses because they are focused on their own trading and in control of their emotions, find ways to deal with losses. If I am having a shocking day I will drop my stakes to £1 and find a market where one tick will happen and I know for sure it will and take the green even if its 0.01 to see green numbers.
Trading is a long and lonely road of self-discovery; by trading for long enough you will learn a whole lot about yourself. You will get past these fears of greed, fear, anger and you will not be anxious.
Trading is a huge mindset battle, so tell me are you going to be one of the professionals that uses their head and concurs their fears and greed? Or an amateur who lets fear drive their journey so they can tell their mates they won a few bob on a couple of horses…