In my view one of the biggest barriers to trading is fear, every trader experiences it, even experienced traders will have a phase that this plays a factor.
Probably the only difference between a newbie and the veteran is that the latter will have found ways to overcome it.
For them it’s bit like falling off the horse, but getting back on and toughing it out, for the newbie it’s a bit like having the training wheels taken off your bike, coming off at some speed then sitting it out or even worse never getting back on.
The way to overcome some of the fear is every time you come off the bike, take a pause, sit back and analyse why did you come off, lost control, road surface slippery, pedalling too fast, trying to take a bend, rather than going straight, not following your planned journey, you thought you were going the right way and someone decided to turn you around and you didn’t expect it.
The more you trade the better you will become equipped to look at your trades and understand what put you into a fear mode.
One important lesson especially when you start out never trade without a stop loss in place, learn how to set them up so that the trade can breathe, but not to extent that you over expose your position, and always be prepared to pull the pin if the trade is going against you, preservation of your capital is paramount.
This week going great till Friday, sold the JPY short on a few positions, seems the markets wanted back into safe havens and seem to be ignoring the possible trade negotiations, also looks like the USD is regaining some of it’s losses, with the shine coming off GBP.
Anyway my fear day, Friday pulled the pin on 6 trades, luckily the beginning of the week had started off well.
-38.9 pips down for the week.
Best Trade: GBP/NZD
Worst Trade: GBP/CAD
One trade still in mix: EUR/AUD short.
Good trading for the week, hopefully a profitable end to the month.
I think it largely depends on the person. Some people are led by greed, others are led by fear. It’s very subjective.
I believe that it is neither fear nor greed but stupidity and the herd mentality that is the biggets problem and why most people lose money.
Cheers
Blackduck
I agree. A herd mentality is what beginners follow. Because they do not have enough experience beginners are bound to be affected by what people say and often behave as per people’s sayings rather than their own analysis.
I still believe that knowledge and experience plays a huge role in determining a trader’s decision. Greed on the other hand also affects the experienced trader.
Both fear and greed exert a constant pressure on all traders all the time. But once you have a strategy and you are able to follow it, its like atmospheric pressure - its there but we don’t feel it because its not changing.
It is possible to see the balance between fear and greed in the forex markets changing. The fastest switch is from greed to fear, when risk suddenly increases. Fear can make large numbers of traders suddenly exit a currency if risk is suddenly increased, such as by news or world events. Which is why significant price falls are often much faster (steeper on the chart) than price rises of the same total amount.
I think pressure exerted by the fear of the possibility of failing is far more powerful than the pressure exerted by greed.
I think from my point of view greed creates the most pressure. Because fear goes away many times but greed never goes away. On the other hand, greed and fear create the same kind of pressure. But greed is more harmful. This greed can be controlled through meditation.
Fear and greed create two kinds of pressure in trading. In my opinion, greed does more harm in trading than fear. When you come to trade and give priority to greed, you will see that your trading results will be different. You will never be a successful trader. And new traders do this thing more. Because they want to make money in early trading, their greed works more in trading.
Courage is not the absence of fear - it is facing up to your fear and doing it anyway.
Nothing wrong with being fearful. Anyone who has achieved success to any degree has embraced fear - and even thrived on it
I read it repeatedly how you have to eliminate fear and stop your emotions.
No you don’t and neither can you - you are a human being.
It’s true with practice many of your trading fears will go away.
One reason I think backtesting is vital is not so much to test how successful a system is but to sure up your faith in technical analysis.
If you had a firm conviction that charts ‘work’ many of your fears would go. But it’s hard for a beginner to believe a few straight lines and coloured bars can actually make you money - it’s almost unbelievable.
Beginners don’t have the database of past trades to have faith in their approach. That can only really be gained through ‘manual backtesting’ where you can see your system at work.
And of course demo trading too
Finally I’d just like to say if you are constantly pushing your boundaries on a daily basis fear tends to diminish in your life.
At some point everyone needs to step up and just grow a pair. Life and trading are all about personal growth.
For me, greed can harm you much more than fear.
Fear and greed is very common among traders. To overcome you have to find out your strength and weakness. Trade based on your strength. If you have the ability to to predict 20 pips move, be happy with that. Find a good risk reward ratio. Do what you are best. Match your expectations with your skills.
I think both are very dangerous for trading. If you want to be a good trader int his market, you need to be fearless and greed less.
For me, it is greed.
For me it’s actually the fear of missing out - which is greed I guess.
For me it’s definitely fear that dominates.
But I don’t think the goal is to be fearless and greedless - trying to get rid of your (in my opinion very natural) emotions is a pressure in and of itself. I think the goal is to know your own reactions and learn to control your impulses.
when we are doing our trades we need to understand that if we will become greedy then our losses from this business will start to increase.
That depends on the person and the situation he is in. But I suggest keeping emotions aside if you really want to succeed in forex trading.
Greedy investors have of hanging on to a winning position too long to get every last tick upward in price. Greed is not easy to overcome. It’s often based on the instinct to do better, to get just a little more. A trader should learn to recognize this instinct and develop a trading plan based on rational thinking, not whims or instincts