At any moment in time, all traders have experienced greed and fear. These are most common human behavior in the markets and they are the major culprit in ruining accounts.

Trading or investing is a simple concept but certainly not as easy. Many start out believing it’s just a matter of learning a method or strategy and everything will follow. But they find out later that it’s a frustrating endeavor. Why? Greed and fear stay even after incorporating a winning strategy. The end result: human emotions are the driver that ruins the tactic, methods, and strategies. How?

Here are a few examples of what greed and fear do:

• Not setting a stop when the method requires placing a stop (fear of taking a loss).
• Moving a stop when it shouldn’t have been moved (fear of taking a loss).
• Removing a stop when it was already in place (fear of taking a loss).
• Taking profits too early when the signal to exit has not been given (fear of profits being taken).
• Taking profits too late when the signal is already given (greed).
• Chasing the market when the entry is already past or no signal was given (greed of missing profits).
• Not making the entry when the signal is given (fear of losing again).
• Buying the pullback that is no longer a pullback but a decline (greed based on judgment that it’s now cheaper) or short selling when the rally is now a continued primary direction (fear of losing).
• Adding on a losing position, i.e. averaging down (fear of losing).

How does a trader go about trading without fear or greed? Although no one can really trade without them, the emotion will still be there, especially when the position is still on. However he can keep them under control by not acting on them.

There are few solutions to this problem:

1. Write a trading plan for each and every trade and referring to it when he feels the emotion is overtaking him.
2. Keep a trading journal with each trade taken along with thoughts and emotions during the open position. Recording these moments will reveal how much or how little control he has over emotions that influence or interfering with his trading method.
3. Use an automated trading system to avoid interacting and interfering with trading. When no trading decisions have to be taken, there is less of a tendency to interfere.
4. Once the trade is taken and stops and targets are set, walk away from the trading station or go about with other tasks. Stay close and follow every up and down ticks will increase emotions and will eventually affect trading.
5. Keep the Profits and Loss (P/L) columns out of the desktop. This is the most important factor of all emotions: counting money. By having it readily available emotion will be exaggerated swinging up and down according the profits or losses going up or down. Removing this information is especially recommended for day traders.
6. Trade small size until emotions are under control. By doing this, it’s obvious that it’s not about making money but about trading the method properly. The further away the thought of money is, the better the emotions are kept at bay.
7. If trading is technically-based, focus on the charts, not on the quotes windows. Scalpers spend so little time in a position that using quotes and ticks are a necessity. For other traders, these can only increase emotional states.

As for Trader Vic mentioned in his book, for every one way to trade it right, there are 50 ways to trade incorrectly. Fortunately, there are also many approaches to solving these trading nuances. But the most difficult task is to identify what and where the problems. Once they are discovered, the trader must have to will to undertake the necessary changes to overcome them. Changes include breaking habits, customs and personal situations in order to begin the process of overcoming them.

These changes can be:

1. Start taking responsibilities for every decision and action he makes.
2. Start being honest to oneself. Admit the mistakes and accept the success as well as failures, past or present.
3. Stop predicting the market, or wanting to be right.
4. Start thinking for oneself and does one’s own research.
5. Stop overanalyzing things.
6. Start accepting uncertainties.
7. Start accepting losses.
8. Stop thinking of trading as a hobby.
9. Start thinking trading and investing as a learning experience for the long-term commitment.

These are overwhelmingly difficult habits to change but they are necessary to succeed in the markets. They all tie in with fear and greed and other emotions that have surfaced one time or another to destroy trading profits and enlarging trading losses.