The emotions of trading

When trading there are two emotions that are more common, and more dangerous, than all the rest; fear and greed.

Fear and greed can ruin even the best trading strategies

One moment of fear or greed can lead to a moment of madness and months of hard won profits going down the drain

Uncontrolled emotions should not be an excuse for losses and losses should not be an excuse for uncontrolled emotions

Remember!! Trading affects psychology as much as psychology affects trading
 


Greed

“You can’t feed on greed”

  • Many people think that greed is thinking that the sole aim of trading is to make money.
  • This is NOT what greed is

Greed is trying to make money too quickly
There are lots of ways to be greedy in trading;

  • Trading in sizes that are too large
  • Trading too frequently
  • Having unrealistic expectations
  • Dreaming of the big hit trade, rather than steadily building your equity


Fear

Fear in trading has two faces;

  • Fear of loss
  • Fear of missing out

The fear of loss compels traders to close profitable trades prematurely, meaning they miss out on potential profit
The fear of missing out compels traders to abandon their trading strategy so they do not miss a major price move
Fear is NOT good as it leads to overtrading and miss-timed entry and exit points
So
DON’T BE SCARED!!