Fear and greed are what traders lose their funds to. For instance, you bought an asset, forgot to set stop losses, the quotes went down. You are pressed with fear – what if it goes even lower, what if I lose even more, then everything is ruined, etc. And what do you do then? You sell.
Greed, on the other hand, usually comes when you’re sky high – why, no rocket can fly without me, I open a deal… And then the quotes start falling, which means: say hello to your old friend fear again!
If the fear is taking over you, it’s important to tell yourself: yes, I’m afraid. Put trading aside for a while and calm down. Probably, it’s time to read your favourite analysts to keep up with the trends and be confident about yourself.
Speaking about the greed, it’s caused by the factors so prosaic that are almost not worth thinking about. The main reason is – our longing for safety and comfort.
In trading this longing shows itself only from one side – you want to earn more. At this moment you lose control over yourself and forget about the price zones, where the market can change its direction.
At these moments you have to remind yourself that the market was, is and will always be there. It won’t run and hide from you tomorrow, you can earn your money without risking your nerves. Remember – profit added to you deposit is better than the one that lives only in your terminal.
One should control their impulses: sometimes they can give clues for intuitively right decisions, but more frequently they only hinder you.