Forex Trading Psychology: How to Deal with Greed to Influence Decisions

The most dangerous emotions in the minds of foreign exchange traders

"A greedy person and a pauper are actually the same."

The Swiss proverb above couldn't be more relevant to us traders. You may have known for a long time that many Forex traders (and their accounts) lose money because of greed. In fact, the proverb extends to trading to say: "Bull and bear markets make money, only the pig's head is slaughtered".

No animal embodies the word greed better than pigs, and in foreign exchange trading, the market has no mercy for those "greedy pigs", even those likePepperstoneSuch well-known trading platforms also remind users to be rational.

What is greed?

Does Webster's definition of greed sound familiar: "a selfish greed and an excessive desire for more things (or money) "?

Let's face it, it is our desire for a rich return that drives us to engage in foreign exchange trading, but when the desire is excessive, it can become unhealthy or even dangerous.

This is why greed is often considered the most dangerous emotion for traders, even worse than fear.

Fear can keep you from trading, but at least your money is safe as long as you keep your hands in your pockets at all times. But greed drives you to act when you shouldn't, which is why it's even more dangerous.

The Dangers of Greed

Greed can make you lose your mind. For traders, this usually takes the form of over-leveraging, over-trading, chasing the market, or remaining over-positioned when you already knew you should get out of the market.

When you think about it, greed and drunkenness don't seem to be any different. It can lead to too much stupidity in your trading system. When greed clouds your trading analysis, you are almost as good as being drunk.

Overcome greed

Like many other valuable things,Overcome greedIt requires a lot of effort and strict discipline. For traders who choose to use platforms like Pepperstone, self-control is even more crucial. It's not easy but it can still be done, all for better self-control.

You must admit and accept that you will not be right every time you trade. There will often be situations where you fail to capture market trends or miss a great trading opportunity.

But that's Forex trading. When you accept the premise that the market is king and you're bound to make mistakes, you focus more on your trading plan than succumbing to greed.