We all know the saying “The greed breaks the sack” and yet we pay attention to the warning that gives us even knowing it could not be true any more that is something very real and common in the world of trading. In fact, greed is one of the main reasons that lead to huge mistakes that lead to the bankruptcy of trading accounts.
What is greed?
According to the SAR, greed is a “disordered desire to possess and acquire wealth to hoard.” The bad thing is not to have the desire to possess wealth (although this may be debatable), leading to an emotion that is harmful to the trader is the characteristic of disorder, but I would define it as “selfish and excessive desire to acquire wealth.”
The trader must have a desire to acquire wealth, to obtain good returns and make good trades. This is what leads to the trader to do what he does, but this desire backfires when it is excessive. That is, when does it become greed. In fact, avarice and greed are often described as the most dangerous emotions for traders to trade and then pushes Survey excessively, risking too without properly plan and operations.
Greed, with characteristic of excessive and inordinate desire, it will push the trader to act irrationally and impulsively. As I mentioned before, often lead to excessive leverage, excessive trading and probably a losing trades clinging to the hope they recover. Greed leads the trader to a state in which the judgment and reason are cloudy and have virtually disappeared.
Overcome greed in trading
Overcome greed as a trader requires more effort and discipline. I say again because the effort and discipline is essential in all stages of trading. When it is greed dominate the ego, to admit that you can not always be right, your operations will not always be winners and that while you plan a good deal, you might miss it.