Greed affects your Forex Trading because it compromises your ability to follow your trading Plan.
The Emotion of Greed is the gravest of all in Forex.
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.
The newbie 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.
It’s not your fault because after all that’s what you were told in the first place. However, this is not true.
To profit from trading Forex, you need discipline and patience. Moreover, Forex trading is not a get rich scheme.
How greed affects your Trading
When you trade with a lot of expectations, you are likely not to use risk management. All you care about is making profits.
Without proper risk management especially setting stop losses, appropriate position sizes and maintaining your trading discipline, there is no way you will make money from Forex.
When engraved with greed, you always hold on to a losing trade hoping it will turn around.
This is where margin calls result from!
More to that, staying long in a profitable trade hoping to earn extra profit usually leads to undesired losses.
All these kind of trading mistakes happen due to greed. Greed affects your forex trading profitability than any other emotion.
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.
- When 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.
- 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 draw downs on your trading account. Or account blowing.
Always follow your trading plan every time you get to the market. That’s the only way to trade consistently.
Let’s now discuss some of the ways you can overcome greed;
How long should you hold an Open Position ?
How long you can hold an open position in forex, 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,...
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