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The art of overcoming greed when trading

Paula Rodriguez

Paula Rodriguez

To minimize risky trades and maintain profitable results, learn the art of overcoming greed when trading. In most cases, greed is can be a damaging emotion for your daily trading activities.

In a volatile market, traders need to be in control of their urges or instincts. When left unmanaged, greed can trigger forex traders to stray from the calculated strategy and expose themselves to high-risk situations. To get your desired outcome, you have to create a reliable trading system and know how to stick to it.

Traders need to analyze the forex market without getting too greedy. When you go beyond your limitations, you expose yourself to risks and possible instability. Along with discipline and focus, traders need to manage any feelings of greed, especially during a live trading session.

How does greed affect your trades?

Greed describes a trader’s inclination to step away from the strategy in order to acquire more gains. This can mean holding a position longer or trading based on pre-conceived ideas without thorough analysis. In other cases, greed can also influence the goals you set for your trading career. In the long run, this can negatively affect your trading account and your overall performance as a trader.

In a forex market full of possibilities, it is normal to want to take profit from each trading session. The risky part about it is when you execute trades that take you away from your strategy. Doing this frequently puts your equity at risk and can lead to more anxiety or fear.

What are the things you can do to minimize greed?

Becoming an expert trader means being able to establish and execute your calculated trading strategy. This should equip traders with a system to bring in profit while also ensuring that boundaries are set. By doing this, you are making sure that you stay within your limits and minimize any urge to trade more than you are able to.

To achieve a disciplined trading mindset and stick to your trading system, find out what you can do to master the art of overcoming greed when trading:

Self-awareness especially when you are in the moment

Being able to overcome greed has much to do with your trading psychology. This involves the way you think and the way you approach the forex market in regard to your trading account. Because of this, self-awareness is highly beneficial for traders who need to take control over greed.

One of the most effective ways to avoid greed is to know when you are being greedy or when you are pushing your limits. By increasing self-awareness, you are able to better manage situations that provoke feelings of greed. You will also be able to become aware of any desires or triggers that influence the way you think.

Set your limitations and manage your risks

Step away from greediness as a trader by practicing risk management. Oftentimes, traders go into a trade without being fully aware of the risks or their risk-return ratio. This creates a state of mind that does not consider the variables or probabilities before entering a trade. When the situation presents itself, traders will more likely go into a trade that can increase the chances of losses.

When trading, it is normal to want to push your boundaries in the hopes of profit. But when you go into a trade that is not supported by your strategy, it will be difficult to achieve the outcome you initially had in mind. To manage greed, be fully aware of your limits and have excellent systems in place.

Depending on what your strategy looks like, you have to learn how to set your limitations and know your risks before each trade. Through a strategy, you can benefit from using this mindset and minimize getting into trades out of greed.

Self-monitoring or tracking

Have a good handle on situations involving greed through self-monitoring or tracking. A great way to be mindful of how you approach trades is by monitoring your actions. To avoid greed as a trader, you need to work on the details.

What makes you go into risky trades? When do you stray from your strategy? How long do you hold a position to hopefully earn more profit? How can you avoid this in the future?

One of the best methods to achieve proper self-monitoring is by using a trading journal. A trading journal is a great tool to record and track your trades. Analyzing this information will help you understand the kind of trades you should not be getting into.

Especially if you are new to trading, this can help you pinpoint stop losses or take profits to help you manage your greed. Aside from this, you can also nurture self-improvement as a trader and optimize your trading strategy.

Practice discipline at all times

Entertaining trades out of greed can be destructive. Constantly trading out of greed can interfere with the pace of your trading career and can even hinder you from reaching expert levels. Because of this, self-discipline is a valuable skill to have as a forex trader. When you master self-discipline, you are more capable to stick to your trading plan while also minimizing high-risk trading scenarios.

For long-term success, practice discipline in both your personal and career life. Here some easy ways to nurture discipline in your forex trading lifestyle:

  • Learn how to prioritize your tasks and the time you need to accomplish them.
  • Build mental power.
  • Implement routines and stick to them.
  • Set goals for yourself in both your personal and professional career.
  • Nourish the body by promoting physical activity.
  • Practice accountability.
  • Have good stress management.
  • When possible, decrease exposure to temptations.

Constantly optimize your trading plan

Dealing with greed is distracting for traders especially if your intentions come from a good place. Over time, it might even become frustrating. Once you have practiced disciplined trading and applied self-monitoring, you also have to make efforts to make sure your trading plan is constantly optimized.

Finetuning your trading plan can lead to better results as a trader. By constantly reaching for growth, you can take on trades within your limitations while also still achieving desired profits.

When you have a reliable strategy in place, you will be less likely to go into high-risk trades out of greed.

Be realistic about every aspect of your trading career

Greedy traders normally have unrealistic expectations of forex trading. With trading capital at risk, it is key to know the realities of forex trading.

Oftentimes, traders who face greed have a different perspective of what it means to be profitable and what it takes.

Most successful traders can attest to the amount of time and effort invested in achieving profits when trading. It will involve hard work, knowledge, experience, and constant discipline to be able to build a profitable trading career. When you are not realistic about becoming successful in forex trading, you are more likely to go into scenarios that can be uncertain or stressful.

To manage greed, you have to be realistic about every aspect of your trading career. This means:

  • Being practical about your trading capital
  • Being aware of the need for good forex education
  • Knowing your strengths and weaknesses
  • Being familiar with the success stories of expert traders
  • Learning about your mental wellness and how it always affects your trading performance
  • Setting realistic timelines that work together with your current capacities as a trader
  • Being rational about decision making especially during live trading

Educate yourself

Staying educated as a trader plays a key role in overcoming greed. Much like being able to gather information on your trading psychology, you need to also stay updated in your trading education.

By making sure you expose yourself to high-quality forex education, you can make better decisions that complement your strategy and will not put you in risky trading scenarios. Because of this, traders need to expose themselves to data that can improve their trading strategy and optimize their state of mind.

On a daily basis, traders need to make decisions based off analysis of information. It also encourages you to become more strategic and open-minded while also improving your creative thinking.

When you give yourself the best information out there, you can make decisions that are more knowledgeable. You will be less likely to make rash decisions out of greed.

Trade effectively with excellent control over greed

The risk of losing money due to greed can be a spoiler, many traders may keep losing trades open in ‘hope’ which ends up affecting their account’s equity. On the flip side, if you keep a winning position open in ‘greed’ and hope of higher gains, you can end up losing unrealised gains as well. Therefore, it’s always advisable to stick with your trading plan, goals and risk management to overcome fear and greed while trading in the forex market. - Aayush Jindal, Titan FX

Decisions made out of greed can put traders in a difficult situation. It can lead you into a trade that will put you in a more vulnerable place and increase your chances of losses. By practicing effective methods to manage greed, you can create a trading mindset that is more disciplined and focused.

To avoid making rash decisions from wanting more profit, be sure to have a reliable trading system in place and overcome greed. You have to ensure all actions are made objectively and with clarity.

As long as you have a calculated strategy in place and stick to it, you will avoid rash decision-making and worrisome trading.