In forex trading, greed is your worst enemy as compared to other emotions of forex.
If not checked, it can lead to massive losses and derailment of your financial objectives.
Many traders, both beginners and seasoned alike, grapple with this forex greed and how to avoid being greedy.
There are several ways of overcoming greed in forex trading, as outlined in this article.
Greed in Forex Trading
Once greed drives your forex emotions, you lose focus and abandon all of your trading plans.
Winning is good! But the euphoria of winning consecutively in forex trading may catalyze a craving for more and more money leading to extreme greed.
This excessive greed often causes a false sense of being in control, as it makes you less careful.
Is greed an emotion? To answer this question requires us to understand greed and the dangers associated with it.
Some risks associated with forex greed include chasing markets, over trading, and over holding on to forex trade.
Forex greed is egotistical and too much desire to get lots and lots of money from forex trading.
This greediness in the forex market often manifests itself in several ways, as shown below.
Forex trading greed arises when a trader decides to hang onto a winning trade, hoping to make more money.
Volatility in the forex market may reverse the trend, and the gains might be wiped in the blink of the eye.
The extreme greed in forex trading might also force a trader to risk more money in a trade, hoping to make a huge win.
This irrational decision will ultimately wipe out a trader’s capital.
In addition, Forex greed has the impact of causing one to participate in many trades, including bad ones.
Handling Greed in Forex Trading
Is greed an emotion? Many beginners often ask themselves this question.
Yes, it is an emotion affecting many traders that cause one to crave for more wealth.
Therefore, fixing money greed in forex trading starts by controlling your forex emotions and the following ways.
1. Use a Forex Trading Plan
The best way to fix your emotions in forex trading is by having a trading plan.
Having the idea is okay, but you need to have the discipline to stick to your trading plans.
For the plans to deliver your financial objectives, you also need to have patience.
Remember, if you do not trade as per your laid out plans, then in essence, you are a gambler.
Gambling is highly addictive while being driven by money greed without following any trading strategies.
2. Smaller Trade Sizes
To decrease forex emotions, consider lowering the size of your trade.
This practice will safeguard your capital as you incur smaller losses while evading over-trading.
Huge losses cause emotional stress affecting your decisions and judgments.
3. Keep Records
Every forex trader needs to keep records in a trading journal.
Evaluating the journal reveals weaknesses and probable cause of action to rectify mistakes.
Successful traders analyze journal data to make financial decisions hence eliminating the risks of fear and greed emotions in forex trading.
4. Use Risk Management
Proper risk management practice helps to minimize losses while maximizing profits in forex trading.
In addition, you will be able to control forex emotions for calm and controlled trading.
Risk management entails having correct position size, using stop losses, and identifying suitable entry and exit points.
To control greed in forex trading, you need proper risk management tools such as a risk tolerance level of less than 5%.
Besides, you need to have a risk-reward ratio of at least 1:3. For example, at a risk of $100, aim for a return of at least $300.
Using stop losses helps to remove your emotions in a trade. Thus, is greed an emotion? — will cease to be an issue to you anymore.
5. Education and Practice
Another way to succeed in forex trading involves overcoming greed through personal development.
Expand your knowledge of forex trading by reading books, tips from successful traders, or attending seminars.
Self-development boosts your self-confidence and trust in your trading abilities.
Also, having practice at the free demo accounts helps to sharpen your skills while increasing your trading experience.
However, being greedy in the free demo account will not hurt your finances, but things are very different in live trading.
6. Control your Excitement
Winning a foreign exchange currency trade elicits a lot of happiness and joyful emotions.
These emotions may ignite forex greed that can easily cloud your decisions and judgments, leading to losses and emotional stress.
Hence, it’s advisable to take a break a day or two to calm down and be able to participate in forex trading without greed.
7. Control the Emotion of FOMO
Regrets in missing participating in the trade as others possibly strike richness may cause you to give in to greed emotion and engage in many additional trades leading to losses.
The Forex market is always there, and you don’t have to participate in every trade.
To avoid the forex trading greed that has seen many greedy traders, in the past, lose their investments, come up with a proper trading plan, and stick to it.
8. Accept the Reality
Forex trading is a business venture requiring analysis and accepting the reality you will not win in every trade.
Making losses in forex trading is common, thus sticking to your trading plans instead of succumbing to the emotions of greed should be your driving force.
9. Proper Mindset
The difference between successful traders and losers is the mindset.
How are your emotions? Are there stresses in your personal life that is affecting your mindset?Are forex losses overwhelming you?
These are some issues you need to deal with as you handle greed in forex trading.
Besides, you need to develop means and methods of controlling your emotions.
This includes physical exercise, taking breaks, meditation, or listening to music.
Conclusion
As greedy traders lose money, the bears and bulls make money in forex trading, says the professionals in forex trading.
If you trade without a plan while avoiding tips such as the ones provided in this article, then you will learn the hard way the secret to successful trading.
The secret to successful trading is to avoid being greedy as the pigs!
Handling forex trading greed is not easy but requires a lot of effort, patience, and discipline while relying on a good strategy.
Read Also:
How to control the emotions in trading
Top 13 Consistent Forex Trading Tips
How to Create a Winning Forex Trading Plan
How to overcome fear psychology in trading
How to develop a positive winning mindset in trading?
Common psychological trading mistakes?
