Greed and fear can be the worst thing to happen to a trader.
It is a common mistake that many amateur and even some professional traders will make.
How many of you have bought a stock at $80 watched it go down to $78 got scared so you sold it only to watched skyrocket to to $100.
When you did this you were incorporating fear into your trading.
You saw that you were starting to lose money in the trade and sold it.
Even though it only dropped a little and didn't give you asell signal.
Now I know it may be hard to stay in a trade after your stock has dropped but you must stay in it unless your rules tell you otherwise.
Once you are in a trade you cannot get out until you have a good reason too.
If you know you will get out if you lose even a penny, don't trade.
If you are trading and your stock has came down to just above your stop you have to stay in it.
If you have a hard time with that, get away from the computer.
Take a do something else and forget about it.
A very successful trader once told me when they trade they pretend they are trading someone else's account.
That way if they lose money it doesn't hurt them as much.
So you've got the fear down, what about the greed?Here is a different scenario.
How many times have you bought a stock that went from $60 to $90 really fast?You were jumping for joy, dancing around having a good time.
You hit your target.
But you feel it can go higher.
You just want to squeeze 10 more points out of this stock.
It's already up so much what's 10 more points?Nothing right? So you hold onto it.
Then your stock goes down to $50.
Owe, should have got out when you were ahead .
So, how do you combat greed and fear?The best thing to do is to have a well tested system and have faith in it.
The more confidence you have in your system the more likely you will just follow it.
Be a robot for a few minutes while you make trading decisions.
Only do what your system tells you, no more, no, less.
It is a common mistake that many amateur and even some professional traders will make.
How many of you have bought a stock at $80 watched it go down to $78 got scared so you sold it only to watched skyrocket to to $100.
When you did this you were incorporating fear into your trading.
You saw that you were starting to lose money in the trade and sold it.
Even though it only dropped a little and didn't give you asell signal.
Now I know it may be hard to stay in a trade after your stock has dropped but you must stay in it unless your rules tell you otherwise.
Once you are in a trade you cannot get out until you have a good reason too.
If you know you will get out if you lose even a penny, don't trade.
If you are trading and your stock has came down to just above your stop you have to stay in it.
If you have a hard time with that, get away from the computer.
Take a do something else and forget about it.
A very successful trader once told me when they trade they pretend they are trading someone else's account.
That way if they lose money it doesn't hurt them as much.
So you've got the fear down, what about the greed?Here is a different scenario.
How many times have you bought a stock that went from $60 to $90 really fast?You were jumping for joy, dancing around having a good time.
You hit your target.
But you feel it can go higher.
You just want to squeeze 10 more points out of this stock.
It's already up so much what's 10 more points?Nothing right? So you hold onto it.
Then your stock goes down to $50.
Owe, should have got out when you were ahead .
So, how do you combat greed and fear?The best thing to do is to have a well tested system and have faith in it.
The more confidence you have in your system the more likely you will just follow it.
Be a robot for a few minutes while you make trading decisions.
Only do what your system tells you, no more, no, less.