Fear and greed are the two emotions that destroy trading accounts. They override logic and cause poor decisions.
Fear
Fear makes you:
- Exit winning positions too early (miss profits)
- Avoid good setups (leave money on the table)
- Hold losing positions hoping they recover
- Panic sell at the worst time
Greed
Greed makes you:
- Hold winners too long hoping for more (let profits evaporate)
- Add to losing positions (revenge trade)
- Trade too large (blow up account)
- Ignore your trading plan
The Goal
Profitable trading requires removing emotion. You do this by:
Planning Before You Trade:
- Know your entry, exit (profit target and stop loss)
- Know your max risk and max reward
- Stick to the plan no matter what
Position Sizing:
- Trade small enough that you don't get emotional
- No position should be large enough to threaten your account
Discipline:
- Exit at profit targets even if you want more
- Exit at stops even if you think it'll recover
- Follow the plan
Key Insight
The best trades often feel uncomfortable. Buying puts when everyone is bullish feels scary but is often the best trade.
Related: Discipline, Trading Plan, Revenge Trading, FOMO
