What is Greed in Forex Trading?

Understanding Greed in Forex Trading

Greed is the intense desire for excessive profits that causes traders to hold winning positions too long hoping for larger gains, take oversized risks, or abandon disciplined risk management for the allure of quick wealth. Greed drives traders to break their own rules, ignore stop losses, widen profit targets unrealistically, or overtrade in pursuit of profits that exceed their plan. It's the flip side of fear and equally destructive to trading performance.

Manifestations of Greed

Greed appears in multiple destructive forms. Traders refuse to take profit at predetermined targets, hoping for even larger moves that rarely materialize. After winning streaks, greed whispers to increase position size beyond risk parameters, exposing accounts to devastating losses. Greed causes traders to stay in markets when they should be flat, forcing trades where no valid setup exists. It manifests as revenge trading after losses, desperately chasing back lost capital.

Controlling Greed

Discipline through systematic rules is the only defense against greed. Set profit targets before entering trades and honor them without negotiation. Use take-profit orders rather than manual exits to remove emotion from the equation. Maintain strict position sizing rules that don't change based on recent wins. Define maximum daily/weekly trades to prevent overtrading. Keep a trading journal to review greed-driven decisions and internalize their costs.