In today's newsletter, I want to go over another common question and that is how to deal with greed.
What Is Greed?
Greed in its most basic form is the need or desire for 'more' or in trading an excessive desire for more 'money.'
Common signs that you are becoming greedy in trading
- Overleveraging
- Overtrading
- Chasing trades
- Holding longer
When greed takes over it can be like consuming too much alcohol, your decisions and judgments become clouded, and end up making bad decisions that negatively affect you.
For instance, you follow your plan the trade goes well, and ends up in profit now you begin to feel greedy instead of managing the trade like you planned you now decide to let it go just a little bit more and more until finally you either get burned or it wins and creates a negative bad habit that will eventually burn you in time and create an even worse downfall later on down the line.
The 5 Steps To Overcome Greed:
1. Have a plan
You first need a trading plan to have rules in place to follow and protect yourself from greed. As well as have something to reference to know when you are succumbing to greed.
2. Start Small
The key is to start small take baby steps and gradually increase your discipline and control. This can be simply done firstly with start with managing risk correctly by starting with small risk and focusing on taking everything one step at a time.
3. Journal
You then need to journal your thoughts and emotions and identify what triggers the impulsive behaviors which trigger you to succumb to greed.
When you can learn to identify your emotional triggers and understand what is causing it then you can finally begin to implement corrective actions.
You can use my emotional tracker to do this easily and effortlessly.
4. Belief systems
Understanding your belief systems regarding money is a big one to look into. You will begin to understand why you think the way you do from what you have learned and experienced through your life that has given you these beliefs that end up sabotaging your trading.
The key is to then challenge these beliefs and create new evidence against them that changes a shift in your thinking. For more on challenging beliefs, you can read more here
5. Keep Balanced
Find a way to observe your thoughts, whether that be meditation, sitting in silence, or
whatever helps you to stay calm and be still. These will help greatly in becoming aware and calming your mind to be ready and bring focus.
Final Thoughts
Greed is a common emotion that happens to many traders but can be overcome with time and persistence using the above methods will greatly reduce the chances of greed affecting your trading. It takes work and time but it's the same with all great things.
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I go into much greater detail and show you my step-by-step blueprint that I used to become a consistent trader.
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