Fear and Greed

In the previous entry.. we shared about the steps to become a successful trader. If you don't read it before.. read it first..

The most important aspect of successful trading is to overcome the psychology involved. Trading is 85% mental and 15% method. Fear and greed are always emotions to overcome which if not controlled will interfere with success.

Fear

Types of fear traders experience..

Fear of losing
Fear of taking a trade
Fear of not taking enough trades and missing out
Fear of being wrong in trading decision
Fear of having to make a decision
Fear of can't control the market
Fear of can't control themselves

Fear reduces the ability to focus on objectivity. Sweaty palm and rapid heartbeat doesn't help the process of trading. These fears will sabotage the trading decision and execution process.. resulting in undesirable outcomes such as missing a trade altogether.. entering the trade late.. etc.

Greed

This is the other evil emotion of trading. What happens to a trader is that the exits after entering trade are based on greed. There is an urge of wanting to maximize the profit for every trade. Every successful trader must have a mindset of being consistently profitable which means take the profits when they are there. Nobody however good sell the top or buy the bottom of every move. Profitability will come from consistency in following trading plan and keep emotions under control. Trading is a business not Las Vegas or a roulette wheel.