Do you ever catch yourself:
- Focusing more on making money and growing your account balance than the actual setups you’re trading?
- Turning a good trade into a bad one because it reversed and you never took profits?
- Jumping into several trades because you’re desperate for a win?
- Sizing up your positions because you feel unstoppable?
- Getting irritated when you lose on a trade because you feel like you need to make money all the time?
- Getting stopped out on a trade, then re-entering with double the size?
- Constantly comparing your gains to other traders?
- Ignoring your trading plan?
If you answered yes to one or more of these questions, you’ve dealt with the monster that’s killed more trader dreams than anything else…
It pains me to hear stories about traders who build up their accounts by trading patiently with discipline … then lose it all because they got greedy on one or two plays.
Don’t let greed be the downfall of your trading dreams.
Table of Contents
The Power to Succeed: How to Conquer Greed in Trading
Despite their massive success and overcoming the odds (90% of traders fail) … they weren’t obsessed with making money.
In fact, some of them struggled for months, even years, before they found success.
What kept them going wasn’t the results in their PnL…
They fell in love with the process, learning the patterns and setups, developing a trading plan, and identifying where their edge lies.
Good traders will make money in any market.
Bad traders can only make money in super-hot markets.
That’s why you’re seeing stories like this pop up a lot more frequently:
How can you develop your skills if you’re focused on only making money?
5 Ways to Go From Greed to Greatness
Establish a Trading Plan
A well-defined trading plan can help you stick with your strategy rather than make impulsive and emotionally-driven decisions.
Your trading plan should include:
- Your thesis on why you’re long or short
- The amount of capital you’re willing to risk on the trade
- Your entry level
- And two exits (one for profit taking, and the other being a stop in case you’re wrong.)
1. Practice Discipline
Believe it or not, I struggle with discipline. If you put me in front of a computer all day, you’ll find me overtrading. Fortunately, I’m so busy traveling and working on my charitable efforts that I don’t have the time to be in front of a computer all day.
But if discipline is an issue for you, then set rules for yourself to help you stay disciplined. For example, if overtrading is your problem, set a rule that you will take 1-3 trades per day maximum. Once you reach your limit, you’re done trading for the day.
If risk management is your problem, set a hard rule on what you’re willing to lose per trade and the maximum you are willing to lose for the day. If you hit your limits, then close out the trade or stop trading if you reach your max daily loss limit.
2. Stop Comparing Yourself to Others
I love sharing stories about my students. It makes me feel proud. However, hearing about someone making tens of thousands of dollars in a single day or six figures in a week can make some traders feel small…
They start forgetting about the process and start focusing on making more money. They aren’t happy that they went from losing to break-even. They see themselves as a failure because they are not making as much as the next person.
Don’t compare your chapter one to someone else’s chapter seven. Stick to the process. I believe the results will follow if you do enough of the right things. But you can’t skip steps, so stop trying to be a $ 1,000-a-day trader if you are not a $200-a-day trader yet.
3. Learn to Take Profits
And if you’re trading listed stocks, the companies will use the pump as a chance to raise capital through a stock offering. A stock offering will dilute the shares and likely cause the stock to tank hard.
It’s better to take your profits and move to the next trade vs. holding onto a stock because you think it will be the next 1,000% winner.
4. Focus on Long-Term Goals
Greed can often lead to short-sighted decision-making. It’s important to focus on long-term goals, such as building wealth over time, rather than trying to make a quick profit.
This can help you make more rational decisions and avoid the temptation to chase profits at any cost.
Eliminating greed from trading is challenging but necessary for anyone wanting to take it to the next level. By applying these five tips, traders can reduce the impact greed has on their decision-making.