It’s so easy to be greedy in this business. It’s easy to think whatever you get, it’s not enough. If you have 200 points profit in a trade, you want 300 points. If you have 300, you want 400. The lack of being satisfied is a big reason why many people have trouble succeeding in trading.
Maybe the way to avoid being greedy with your trading is to find out why it’s so easy to be greedy with the markets. Greed stems from a belief that there is never enough or there won’t be enough. When the market is continually moving, isn’t it always possible to get more out of a trade? A greedy person will never be satisfied, they will always want more no matter how much they have. It seems the reason people are greedy when trading is because they take non-market factors (like how badly they need the money, what they need it for, can they afford to risk it, etc.) and apply them to the market and their trades.
But it doesn’t really make sense to do this because those non-market factors have nothing whatsoever to do with which direction the market is going. So to take those factors like I want to use this money to buy a bigger house or I need this money to pay my bills. While those things may be true, they don’t have anything to do with which direction the market is heading. So letting those things control your trading decisions makes you greedy. It makes you want more than the market may be offering, and it influences you into not acting in your own best interest. Thus, you can easily be tempted into thinking there is a lot more in a particular trade just because you want more money and that pushes you into wishing and hoping. And, as we discussed a little while ago, that is also not acting in your own best interest. Wishing and hoping will not make you any money.
You may remember when Michael Douglas in the movie Wall Street said,
“greed is good!”
Well, you know what? He was way off. Maybe it sounds good in the movies, but it’s definitely not good in trading. In my opinion, being greedy will shorten your trading career faster than any other mistake you can make.
Do share your views and lets learn from each other...
Wonderfully explained sir. My mentality earlier was same as u described. I failed miserably several times expecting too much. Later I started to expect only reasonable profit from mr.market and I started making money better.
Yo totally agree. Greed is one of the factors that makes us a loser in the market. And many other psychological factors.
People get motivated from non market factors like you said and use it the market which fails miserably.
The only way to avoid greed and other psychological factors according to me is by having strict rules and following them even more strictly. Rules are generally confused with strategy, while it’s totally different. When you make a rule you give yourself behavioural guidelines about what will you do when. This includes money management, stop loss definitions, profit booking definitions etc.
Well Said @SureshG … Moreover as a beginner I can empathize with these lines. I perceive every tick as missed opportunity…LOL…Crazy isnt it… I know its not the right attitude towards market…Hoping to change it soon.
If you Take your premium in hand then you can test your greedy . Say ex. If you are in gain of 100% profit in option trade holding two lots, sell one lot leave another one… Also it depends time
@DA3110…since you are aware of the mistake …I guess you can consciously reduce your errors more as you trade more. Peter Brandt, legendary trader says, even now he has issues with exit so he gets out at a pre fixed targets and most of the time he leaves money on table as market moves up after his exit. but he says that discipline helps him shield from mental damage of losing money after making profits. In the long run he is happy to take fixed targets than really struggle with exit management
I have identified my problem. I understand everything when I am not trading.But once I am trading I am trying to do everything, that I should not be doing.
I will rectify my mistake from next trade. I have stopped trading for some time because of this.
We should start controlling our mind and not let the mind control us. Controlling the mind is through discipline, focus, contentment, confidence on our methods.
Getting a control over our mind is easier said than done, but we should make a sincere effort and will get better with time.
One may learn to Master Technical Analysis, Chart Interpretation, Read thru company books like Tin-Tin. But in the end if you don’t have control over you emotions. Loss will be your Life mate.
@SureshG Sir, very well written and I agree with all the points you mentioned in the post. It kind of reflected what i was going thru when i started doing intraday trading. With more experience and controlling myself, i have been able to get better results.
I would like to add one more reason to what you described as potential fail points in Stock Market (and this is based on what i faced as a challenge to curb myself). Since Market fascinates so much to many of us that sometimes money becomes secondary and instead the sheer enthusiasm of being correct in every trade takes you over and you try to do multiple trades to prove a point to you or others that nobody can better predict the price movement than you. This might take all the profit you may earn on successful trades plus the brokerage, STT & taxes may even reduce capital.
So i realized the value of keeping intraday trades limited to successfully remain in positive.
Once again, thanks for such nice article to remind us the value of discipline in stock market.
I would like to add one more reason to what you described as potential fail points in Stock Market (and this is based on what i faced as a challenge to curb myself). Since Market fascinates so much to many of us that sometimes money becomes secondary and instead the sheer enthusiasm of being correct in every trade takes you over and you try to do multiple trades to prove a point to you or others that nobody can better predict the price movement than you. This might take all the profit you may earn on successful trades plus the brokerage, STT & taxes may even reduce capital.
So i realized the value of keeping intraday trades limited to successfully remain in positive.
I know its not the right attitude towards market…Hoping to change it soon. 
