The First Deadly Trading Sin Of The Remote Forex Trader: Greed
By Ultimate Trading
Greed Can Force The Remote Forex Trader Into An Early Retirement
In the markets, greed is often a good thing. It is what drives
companies to perform well, and what drives much of the markets
movement. Its the effort that the
forex trader will expend trying to make a profit that creates
the market movement that enables you, as a remote forex trader, to
The desire to make money is what motivates a remote forex trader to
become successful. But the desire to succeed is different from the
desire to get every bit of possible profit from a trade. This kind
of reckless greed makes a remote forex trader hold on to their
position long after the downside has started to outweigh the upside,
until risk outweighs potential reward.
Here's an example: a remote forex trader sees that a particular
stock is starting on a run; it's reported good news and is already
up 20% for the day. The volume is still building; it's stable at the
current price; the market is rallying strongly; and it looks like it
will go higher. The remote forex trader buys 1,000 shares at $6 a
share. By 12:15 P.M., the stock has raced up to $10 - a gain of over
66% for the day, and a profit of $4,000 on 1,000 shares.
This remote forex trader knows that round number price points, like
$10, are psychological barriers for the remote forex trader and that
if a stock is going to stop rising, it will probably be near a point
like this. As it turns out, after momentarily shooting to $10.03,
the price stops rising and starts to go down.
The remote forex trader also knows that he should sell now and
re-buy later. But instead of acting wisely, he keeps thinking, What
if it goes to $12 before it stops? What if it makes a 100% gain? How
will I ever forgive myself for missing out on another $2,000 profit
because I sold too soon? His greed conquers his trading experience.
Of course, what ends up happening is that the stock drops down to
$9.50 and then $8.75, ending the day at $8.90. The next day the
market opens down and the remote forex trader is lucky to get out at
$8.70, down $1,300 from the profit he could have had.
The way the remote forex trader gets around the lure of excessive
greed is to take profits consistently. It doesn't matter if the
stock goes up another dollar or two after you're out of the
position. The important thing is that the remote forex trader made a
clean profit and is ready to go on to the next trade with even more
capital than he had before.
Going on to the next trade is better than staying in the old one
once it's gotten too risky, because the next trade will have an
upside that outweighs the downside. (If it didn't, the remote forex
trader wouldn't have any reason to get into the position in the
first place.) The old trade's downside has begun to outweigh any
further gains hes likely to make.
remote forex trader locks in profits, he may miss a few highs,
but hell stay consistently ahead. Its better to be consistently
profitable than to risk losing what you have already gained. Its
also wise for the remote forex trader to consider setting his goals
for solid gains, not for the maximum possible gains. Aiming always
for the most possible profit for a trade locks you into a greedy
mindset that will hinder your success in the long run.
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