Geed & Forex, is greed needed?

Discussion in 'Forex' started by corez, Dec 27, 2017.

  1. corez


    “loss is not as bad as wanting more.”

    – Lao Tzu

    When it comes to greed, the best advice anyone can give is to always take your profits too early. Why? Because the biggest mistake people make is to stay too log and then lose. This doesn’t only apply to traders either, poker player and other types of investors are guilty of it, even the most experienced of them. There is on major emotion that gets the better of them, and that is greed. If you are apart of the rare breed that has full control over this emotion, then you are a better speculator than 95% of people out there scrambling after wealth.

    This however, is a difficult act to pull of successfully. It is a part of the human psyche that is heavily ingrained within each of us. It is not something that can be deleted or exercised from our personality. Greed is essentially a paradox , by reducing it, your chances of getting rich greatly improve.

    Greed means wanting more, more, and always more. It’s like going to a buffet table and filling your plate to the maximum in the fear on your return, the table will be empty. Greed is the self-destructive cousin of acquisitiveness. Acquisitiveness is characterised by a strong desire to gain and possess, which is not a bad thing in itself. But acquisitiveness that’s impulsive, acquisitiveness that is out of control to the point that it defeats its own purpose; that is greed. Fear and loathe it, it’s your worst enemy.

    The biggest problem with greed is that sometimes it works, sometimes holding on leads to major wins, and when this happens, you’ll want to ride the winning trades forever. Hopefully, you’ll have good sense and be in the right frame of mind ti realise that winning trades cannot last forever. However, if greed has you by the collar, you will whisper sweet nothings to yourself to keep yourself in the trade, but eventually, inevitably, your position will turn against you, and the intoxicating illusion which you created will quickly fade, and reality will slap you across the face.

    There will be times, undoubtedly, when your early exited position continues to sky rocket in the direction you were previously in. in hindsight, your early exit will seem like terrible mistake, it can be enough to bring a grown man to tears. But there is hope, the law of averages will be your saving grace; there will be a dozen or two trades when it turns out to be right. As previously stated, you make more money when you control your greed.

    The solution? Always assume that any combination of events that are in your favour, are going to be short-lived. And your profits therefore, won’t be outrageously big.

    In short, always take your profits to early.
    Last edited: Dec 27, 2017
  2. Have a stop loss like an adult, take it like a man when you get stopped out and you can stay in a winning trade as long as you want.
  3. qxr1011


    Wrong. Taking profits too early is no better than taking losses too late.

    One has to take the profits (and the losses) not too early and not too late, but when it is the right time to take them.

    And the right time to take the profits is what the method will allow.

    And the method should allow as much as the market runs in your direction neglecting negligible (by the method) fluctuations within the trend along the way.

    And it has nothing to do with the greed or the fear, it's just optimal trading :)
    Last edited: Dec 27, 2017
    beginner66, nooby_mcnoob and Xela like this.
  4. Xela


    Noooooooo, not at all! As mentioned just above, taking profits too early is just as ill-advised as taking losses too late.

    And in reality, this is especially bad advice for spot forex traders, many of whom are (collectively) relatively uneducated, undercapitalized and unsophisticated traders, overall, usually using far too much leverage, and trading directly against counterparties who hold their deposited funds while also making up both the prices and the rules governing the bets (which they typically like to think of as "trades" in spite of no currencies actually changing hands at all).

    Please also excuse my mentioning that perhaps not a great idea to join a forum and immediately offer as your first post an article already published on the web, just pasted in here (particularly when it's giving really poor advice that misses the point, because that probably increases the chances of its being spotted straight away when members instinctively wonder something like "What's this nonsense and where did it come from"?).
    Last edited: Dec 27, 2017
    nooby_mcnoob likes this.
  5. Sooooooo........ not too early...... but not too late......... you should close trades and take profits at the RIGHT time???? And this METHOD will ensure that you take profits not TOO soon but not TOO late?? Always at the perfect time? Is that correct. Am I missing something?
  6. Is it possible that there’s no correct answer ?? Maybe?
  7. sle


    Exactly. It's called the disposition effect (reference below, I think this is the original paper), the general idea is that given symmetrical expectation, investors are likely to hold on to the losing positions and liquidate the winning ones.
    Xela likes this.
  8. NeoTrader


    Depending on your definition of what "a perfect time" is... Yes, that is correct.
  9. qxr1011


    yes, that is correct

    just keep in mind that the time will be as perfect as one's method is perfect :)

    but since no method is absolutely perfect, one has to allow for some imperfections but only to the extend that one can live with them
  10. kwasik


    It's all about timing. If the trend is still going strong stay for as long as possible. Dont make panic decisions that will come back to haunt you later.
    #10     Jan 5, 2018