Greed in Trading
The Destructive Power of Greed in Trading
Greed in our favorite business is one of the most destructive emotions faced by traders. Despite the fact that trading is a process based on analysis, strategy, and mathematics, greed can undermine all these aspects and lead to large losses. That’s why I want to talk about why greed is a problem and how it affects trading.
Why Greed in Trading is a Bad Thing
Ignoring Risks
Greed forces you to focus solely on potential profits, ignoring possible risks. When you see a “sure thing” in the form of a promising quick and big profit, you may start taking more risks than your strategy allows. This is especially dangerous in the crypto market, where price volatility can be significant.
Example: You open a deal to buy BTCUSDT, hoping that the exchange rate will rise. You see that the price has rolled back down a bit, but you decide that “now is the time to buy, because the price will go up again soon.” However, you forget to set a stop loss, relying on intuition. The market keeps falling, and you end up losing more than you...