Trading Psychology: Greed
Greed is known as one of the most dangerous emotions in trading. It is mostly caused by a streak of wins or by success. You will feel like you are mastering the trading
game, and it will make you feel like you found the holy grail. You will quickly grab the illusion that trading for example with 24option trading is an easy game which will make you rich in a short period of time. You will start searching for luxury products and you probably think you are going to make it within the same year. With 24option the first withdraw is completely free.
Greed also occurs when you are trading without a plan or a target. With a target, we mean a realistic goal which is truly achievable. Don't set goals as a new Ferrari in 1 year or something, as it isn't realistic. Set goals as; Buying a new Mac Book in a couple of months, or anything like that. Trading without a goal is just as driving without any destination. You must stay disciplined and focused as a losing streak can occur-just as fast and simple as a winning streak! A lot of greedy trader's jump in with extra position size when a trade is going in their favor, they are simply taking more and more risks to satisfy their greed.
Even the best traders can be brought down to the bottom by greed. A lot of amateur traders think, that if they can make 30 pips on a small lot size, they could have also
done that with bigger lot sizes; Completely forgetting about their trading plan and risk management. You only increase your position sizes as your trading plan lets you
do so. When your account is growing, you don't need to scale up the sizes immediately, as you could also bring the risk down. You don't need to double your account or anything in that direction. The only need you have, is to learn a strategy which makes you a living from your trading account!
Furthermore, greed is caused by being grounded and the lack of setting proper trading targets. When you set up your actual target with a proper plan, you won't be
easily tempted to risk the whole thing. When you achieved your target, don't forget to hold gratitude towards your new goals!
Greed can also be accused by overconfident traders! When you feel overconfident, you are more than likely going to forget about all danger and traps in the market. No
matter how confident you are of yourself, you should always take in consideration that any trade can lose, ANY!
Get rid, if you aren't already’, of the "get rich quick" thoughts and start realizing that trading is a long term game which gives you enough probabilities to make a decent income from it. If you are using a decent risk management, in combination with a decent trading plan you will become profitable in the long-term. Never forget, out of 1000 trades with an 80% success rate, there are still 200 losing trades. It's simply impossible to predict if the price goes in the wished direction.
”Greed does not rest until it is satisfied, and greed is never satisfied"