How to Manage Fear and Greed in Trading
There will be no human being who can say he doesn’t have fear and greed in his mind when they are making any decision for life. In the trading world, fear and greed also play some role.If you give the driving power to these two factor, be sure the end of your trading career is near. So fear and greed are two types of obstacle which keeps you away from having a sound trading career.Controlling these emotions can make a huge difference between a successful and a losing trader.
What role do fear and greed plays while trading?
Fear and greed can hurt a trader in such a way that he cannot even imagine. If you allow these factors to influence while you are trying to take an entry or exit decision, be sure to lose. Fear often makes you restless when you are trying to make a trading decision like you make find out a good entry.But you might not open it because you are not sure about it and don’t want to lose money. Sometimes you might feel so scared of thinking that the market might goes against you.As a result, you close your position before gaining the potential profit that you might earn.
On the other hand, greed is the most dangerous thing in the trading industry which alone can ruin a trader’s trading career. There are lots of traders who try to join this industry to trade with a small capital and use leverage. They think like they will earn a lot from it and as a result, when they find any good signal they open position with big lots and blow their account. Sometime greed will give you fake feelings like a losing trade can go in your way or you may warn more from a profitable trade which leads you to remove the take profit and stop loss level. As a result, the end of your trading career is inevitable and you may not think to re-join this industry in your life.
How successful traders manage fear and greed?
A successful trader keeps emotions like fear and greed far way when there making any decision that is related to trading. They never give fear and greed to influence them in any aspect of trading and this article, we are going to talk about how they manage this type of emotion.
Having a trading plan
a should must a trading plan which will help him to be in profit no matter what is his winning rate. Once you make a trading plan for yourself try to practice in a demo trading account until you feel confident enough to use it in trading with a real account and once you are confident enough with your plan then fear will not influence you when you are making any trading decision. You can check here and study the analytical post of the elite Aussie traders at Saxo to get an idea how they use a strategic plan to trade.
Small lot size
We always suggest you fix a lot for your trading when you are thinking about investing money in your trading account. This lot size has to be matched with your account balance because if you use a bigger lot size than your account can handle then the fear of losing from a trade will be higher. So we will suggest you use lower lot size for your trades than your account can handle and in this way you can be sure if your trades go against you then you will not face much higher loss whereas your fear level will be very low. Thinking about a bigger lot size can be an indication that greed is trying to influence you and never think about increasing your lot size no matter how big is your account balance.
In the end, we are going to say that keep yourself away from all type of fear and greed if you are trying to make a career in any industry. Because no matter in which industry you are in fear and greed will always be an obstacle to your success.