10 Pips Per Day Temptation ~ forex news market_clock_2
As a forex trader, you’re constantly fighting your inner instincts of fear and greed. We’ve talked about how fear can affect your trading, but what about greed?
Forex greed is one of the psychological aspects you’ll come up against and need to deal with as you’re trading. An example of when greed can rear its ugly head is when you’ve entered into a “buy” trade, and price has moved up nicely and hit your target. You’ve taken your profit but then price keeps moving, up and up and up! You kick yourself and think: “man, if I had just stayed in that trade …”.
This is a natural way of thinking but it is the WRONG way of thinking when it comes to forex trading. The most important thing you can do is to stick with your system, the system that you’ve tried and tested and you know to be profitable. So, if you’ve taken your profit on the trade, pat yourself on the back and say to yourself “excellent, I made a nice profit and I stuck to my system!”. If the price keeps going up and up once you’ve exited the trade, then you just need to take it in, unemotionally. Think to yourself: “wow, look at that price go. I hope some of my trading buddies are riding that wave up!”.
Something else you can do that is constructive, is to analyze the times that the price keeps going, do some backtesting and forward testing and see if it’s worthwhile changing your system to incorporate a “letting the profits run” factor. If, and only if the probabilities for success are better off in the long run, then you can adopt your amended system where you let the profits run a bit further – perhaps with a trailing stop.
Control your forex greed and remember the old saying: “it’s better to be out of a trade that you wish you were in, than to be in a trade that you wish you were out of.”
Trade with discipline and Trade Seriously!
Mark Thomas
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