Excessive desire for too much profit makes traders to want more & more even when they are in a losing trade. How irresistible and dangerous!
In the market, the bulls make money, the bears make money and the pigs get slaughtered. If you get greedy in the market you are slaughtered.
This is common especially with the forex beginners. Because they were told they can make any amount of money in forex, they come with unrealistic expectations. They think they can realize their dreams within a single trading day. In so doing they become greedy, over trade and expose their accounts to high risk.
With this kind of desire, you are likely to forget using risk management because all you care about is making profits and don’t want any losses. When engraved with greed, you are likely to hold on to a losing trade hoping may be it will turn around. This is where margin calls result from!
More to that staying long in a profitable trade than what your trading plan says hoping to earn extra profit usually leads to undesired losses. All these kind of trading mistakes happen due to greed.
In the forex market, anything can happen and the market can turn around wiping off all your already made profits. It is very important to follow your exit procedures religiously.
How do you know you are under possession of greed?
When you notice some of these characters with your trading behavior, watch out greed might be taking hold of you.
When you enter a trade and take more than one positions using the same setup on the same currency pair with a hope of earning more profit from those positions.
If you are unable to accept a loss when a trade goes against your direction and you hold on hoping it will turn around and you earn a profit.
If you stay long in a profitable trade and even push your take profit target further because you are hoping to exhaust all the profits from a trend.
If you find yourself trying out all trading methods and taking as many trades as possible to profit more at the end of the day.
If you are the kind of person who trades with no stop loss and use big sizes on your positions because you are hoping to get a bigger profit.
You always want to double your profit because you want to compensate for your previous losses, so you opt for a bigger size or set your take profit far from your entry or you take many trades in a single day.
When under influence of greed,you are so desperate to earn profits and double your account. Stand warned, “Account blowing in progress.”
Being greedy is very dangerous for a trader. Greed leads to large drawdowns from your trading account and may lead to the blowing of your account.
When you get greedy, you will be slaughtered. Always follow your trading plan every time you get to the market. Only that way you will be able to trade consistently.
Let’s now discuss some tactics to deal with greed;
How long you should hold an open position, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer, this...