How to Control Greed When Trading | The Diary of a Trader


Hello and welcome back to the course in the
film Wall Street Gordon Gekko famously stated that greed is good. However in practical terms greed can cause
major issues with your trading from a snake psychological standpoint Green is one of the
most dangerous things that a trader must deal with. It is quite easy to fantasize about the millions
of dollars that you’re going to be making trading burnt you know how much money on a
particular trade you’re going to have to be involved in as well can be a fantasy. However this is one of the most dangerous
pitfalls that you will run into during your career. Unfortunately it’s very common and a leading
factor to wiping out retail accounts. Quite often you know traders will look at
a position that is working in their favor and convince themselves that the market is
going to make them rich overnight and one recent example is in front of you. This is the bitcoin U.S. dollar weekly chart
on the bit Phoenix Phoenix exchange. And here you can see this weekly chart during
twenty seventeen was completely out of control. I mean we went from a thousand to twenty thousand
dollars or just below it. In less than a year that’s a 20 time return. That’s ridiculous. Unfortunately most people did not think about
this and they jumped in. I mean when you look at this and you have
no dog in this hunt as it were if you just look at this chart like this what part of
the Shard tells you you should be buying at this point but unfortunately a lot of people
did. Coinbase had three hundred thousand new accounts
every weekend open up right around this candle and you can see what it’s done since then. This for reference was when the futures market
started to open up. So when you step aside from this market it’s
easy to see that here at 15000 thousand on the way up it wasn’t a smart buying for those
who got in closer to 20000 you’re already down 50 percent. Now that doesn’t mean it can’t come back. But that’s a lot of pain to go through in
the short term. Even if it goes in your favor. Realistically markets like this tend to crash
just as hard as they go. So I suspect we could go lower but that’s
that’s neither here nor there because most of you are going to be trading Forex and forex
would be leveraged. And I can tell you right now that if you’re
in a leveraged position say in the euro or the Japanese yen or something and it goes
as far against you 50 percent of the actual underlying price you have just been stopped
out in your accounts blown up. So really this mistake was easily avoidable. All you had to do was ask how much further
can this go at least in the short term. Is it overbought. A simple glance of this chart when it’s this
high should tell you that yet there are plenty of people willing to jump in trying to get
rich overnight and that get rich overnight mentality is one of the Biggers biggest probably
damaging things for a trading account. So simply becoming greedy and not thinking
your way through a position it’s one of the greatest ways to lose money in these markets.

Leave a Reply

Your email address will not be published. Required fields are marked *