Greed is the worst enemy of all in Forex trading. It is time to look into ways that can help you to defeat this enemy whenever it surfaces. The first step in doing that is understanding how Forex works and fully comprehending the reality of it. Once this understanding is clear as daylight in your mind, greed will gradually lose its power. In the subsequent articles, we will also discuss some additional ways to manage greed in forex trading.
Forex Market is bigger than you think
The forex market is so huge and you are just one of the million of traders who are trading Forex. What does this indicate? This means mistakes are bound to happen and there will be losses along the way. Accepting this as a normal, can actually help you to remain calm after losses and be careful when you execute your trades.
When greed drives your decision, you forget this reality. If you have seen some consecutive profits, the euphoria of winning can make you crave for more and you may temporarily forget that the master is a lot bigger than you. It gives you a false sense of control and makes you be less careful.
So, fix this thought in your mind: There is no way for you to be right every time. Even the most experienced, the most skilled and the richest Forex trader cannot be right at all time.
The Greed to be Right
In the post about fear, we said that one of the fears is the fear of being wrong. The other side of the same coin would be the greed to be right. So, greed doesn’t have to be always about money.
Have you heard of the expression ‘Better lucky than good’? Forex trading certainly isn’t gambling and becoming more skillful is always a possibility. But, there is a good secret to handle the greed to be always right. It is to attribute your successful trades to luck rather than attributing it with your own skill. Your skill is directly linked to your self-image; the desire to be always right is linked to your self-image too! So, attributing your success to luck is really good for your psyche and helps you to reduce your greed to be right.
Organize a system
When you have a good trading plan and trading discipline, it is difficult for greed to take over your mind. So, it is always advisable to have a concrete trading plan and develop a good discipline in trading. This discipline also includes good risk management too. If you make it a practice to not to risk more than 2% of your capital and stick with it, then greed cannot touch you that easily.
Make sure you are always conscious of how greed influences your decisions. When you bring more awareness to your thoughts and emotions, you can see very clearly when greed creeps in. As you remind yourself how detrimental greed can be in Forex trading, it will slowly fade away.