How Greed Works in Forex Trading
Traders are fully aware that currency trading often invokes the most formidable, sometimes unmanageable, human emotions. Aggressiveness and greed may lead to a negative state when self-control is compromised. Even if an expert discovers through time that it is not okay to be guided by negative impulses, which usually a beginner has trouble coping with.
A trader can learn that profit from forex trading will bring much more earnings than what they can think of. Here, financial possibilities are almost infinite and there are plenty of tales of successful businessmen who started out with Forex that can serve as proof to this assertion. Because of that, many people fall into the traps of greed, thinking that they can achieve more through it.
What happens to a greedy trader?
Greedy traders usually trade more than what they can. They have a fear of missing out on opportunities, which most of the time, only leads them to erroneous trades. Professionals would always advise against this practice. Greedy traders like to think that they can get rich easily by opening their doors to any deals presented to them at the moment, also known as ‘overtrading.’ However, choosing the right kind of trade is the most efficient way to gain profits.
Aside from it’s not helpful to overtrade, being greedy is also very risky. Trading bigger sums don’t necessarily get more money in. Unless you’re absolutely sure about what you’re into, you will tend to lose a lot of your capital. Even if you’re not losing the deal, you might be getting money back less than to what you’ve lost. You may as well consider it as a defeat, not a success.
There are also greedy traders who don’t like taking risks because they fear the opposite – losing their resources. It’s just rational to be scared of losing your hard-earned money but it isn’t ideal to keep it in your pockets for too long because it won’t grow. Some traders are very concerned about losing back what they’ve already won. But trading isn’t trading without the risk.
When is greed good in trading?
Professional traders will definitely say that there isn’t a time when greed has become advantageous in the trading world. However, there might be instances that being greedy can help a trader deal with certain situations.
Some say that greed can be highly rewarding especially when you ride the waves of an excellently moving market. However, you should not make decisions anchored on the desire to acquire more because, as mentioned, it brings so much risk. It is advisable to always be prepared by placing stop-loss in your deals when greed has taken over your emotions in a particular trading day.
Psychologists pointed out that greed serves as a survival mechanism, and in fact, greed is natural to human beings. Getting rid completely of your system might not be entirely possible but you can do something to not let get the better of you. By being disciplined and keeping a trading journal, you can acquire the right motivations and set realistic goals.
