“A greedy person and a poor person are actually the same thing.”
The Swiss proverb above couldn't be truer for us traders. As you know, many Forex traders (and their accounts) have suffered because of greed. In fact, this is the case with the proverb “Bulls and bears make money. Pigs are slaughtered“He came around.
No other animal embodies greed better than the pig, and in trade, markets show no mercy for pigs.
What is greed?
Merriam-Webster's definition describes greed as “A selfish and excessive desire to obtain something more (such as money) than is desired.“Look familiar?
Let's face it, it's our desire for profitable returns that drives us to trade, but this desire becomes unhealthy – and even dangerous – when it is in excess.
This is why greed is often considered one of the most dangerous emotions for traders; Worse than fear.
Fear can paralyze you and stop you from trading, but your capital is safe as long as you keep your hands in your pockets.
Greed, on the other hand, drives you to act in ways and at times when you shouldn't; That's why it's dangerous.
The dangers of greed
Greed causes you to act irrationally. For traders, this usually comes in the form of excessive leverage, over-trading, chasing the markets, or holding onto trades that you know you should have gotten out of a long time ago.
When you think about it, greed isn't that different from alcohol; It can make you act foolishly when you have too much in your system. When it gets to the point where greed clouds your trading judgment, you are actually screwed by it.
Overcome greed
Like many other worthy endeavors, overcoming greed takes a lot of effort and discipline. It's not easy, but it can be done. It's all about taming your ego.
You will have to admit and accept that you will not make the right call every time.
There will be instances when you will not be able to catch the full movement of the market or times when you will miss a perfectly good setup.
But that's how trade works. When you accept that the market is bigger than you and that you are bound to make mistakes, you will focus more on following your trading plans rather than giving in to greed.
Many successful Forex traders have said that they would rather be lucky than good. For them, it is better to attribute success to luck rather than their own skills.
It may not be good for your ego, but it is definitely good for your trading psychology. Perhaps this is one of the secrets of trading.
Don't be a pig and you won't be slaughtered.