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Abstract:Fear and greed are often identified as the main drivers of financial markets. This is clearly an oversimplification, however fear and greed do play an important role in the psychology of trading. Understanding when to embrace or tame these emotions could prove to be the difference between a successful trade and a short-lived trading career.
Fear and greed are often identified as the main drivers of financial markets. This is clearly an oversimplification, however fear and greed do play an important role in the psychology of trading. Understanding when to embrace or tame these emotions could prove to be the difference between a successful trade and a short-lived trading career.
Keep reading to learn more about fear and greed in trading, including when these emotions are likely to surface and how best to manage them.
Traders should have a trading plan in place to avoid any emotional impulses that deviate from the plan. Some examples of this include: overleveraging, removing stops on losing positions, doubling down on losing positions.
Traders also need to be accountable to themselves when trading. The best way to do this is to create a trading journal. Trading journals assist traders to record their trades and make note of what is working and rectify strategies that arent. Its important to remove all emotion when evaluating the results of your trades and cut unsuccessful strategies.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.