If I told you that Mr. Greed is a demon, and he is locked within every man and woman, including YOU, what would you say?
Yeah yeah, I know!
It’s only natural for you to either deny it or just brush it off, like I was talking some nonsense, but the truth is, you may never know how much of a demon he is, until you pick forex trading as a career.
He is that strong being that continuously fuels our desire to do more than just settle for average in every endeavor we pursue. Mind you, he is also responsible for sending many traders to their early ruins.
You want to know how?, let’s forge ahead.
How Mr. Greed get’s Enabled
Through life, Mr. Greed is always fed fat by our families, friends or those close to us. That simple encouragement for us to be the best in academics or the fiercest hustler in the game, all adds up over time.
We begin to imbibe a belief system that being productive is doing more or hustling more. Achieving success with such a mindset only continues to feed Mr. Greed.
We finally become addicted to Mr. Greed until the day we stumble across forex trading.
Mr. Greed in forex trading
I will tell you something you may not know.
If you are a dedicated and new to forex trading, mastering the theoretical part of forex trading will take you less than a month of two.
Seriously, I mean it.
However, caging that demon within you, called Mr. Greed is what may take you a decade to master and that is if you do not give up before you eventually learn to perfect the art of controlling Mr. Greed.
The easiest way I could explain this concept of taming this demon within, is using an anime series titled NARUTO SHIPPUDEN, which till date is my favourite series. If you haven’t watched the anime series, please do.
A summary of the anime series is a story surrounding Naruto (the main character), he had a very powerful demon locked within him, in order to use the strength of that demon within him to win some of the fiercest battles and save both himself and that of his clan, he had to become friends with the nine tailed beast within him.
So the big question now is… How can we make Mr. Greed our friend?
How to turn Mr. Greed into our close ally.
Being greedy or wanting to achieve more is not a crime if you are not hurting anybody. However, knowing how to use Mr. Greed to extract money from the financial market is something you need to learn if you ever want to be successful at trading.
To start with, you actually need Mr. Greed, but in small controlled doses. Until you can master how to use him, you need to lock him up in a cage just like in the anime series.
There are steps you could take as a trader in order to tame Mr. Greed and turn him into an ally. These steps are:
1. Less screen time:
One of the reasons why it takes traders several years to master how to use Mr. Greed is because they tend to bring the HUSTLER MENTALITY into trading, and the hustler mentality is:
“If you ain’t always busy, you ain’t gonna be successful“
This mindset is counter productive when it comes to trading.
You want to know why?
Simply because, psychological fatigue can not be measured, hence, a trader cannot ascertain when his psychological storage has been depleted. Hence if you stay long enough in the market, you can no longer differentiate between high probability trades and low probability trades.
You start seeing trading opportunities everywhere, and that’s when you start feeling Mr. Greed gently stroking you in your shoulders, urging you to take a trade.
Better still he may also start taunting you about that Ferrari you said you were going to buy before the year ends, but still haven’t bought it.
REMEDY:
Work towards having a trading plan. A trading plan differs from one trader to another. However, a trading plan should only expose you to your screen, when there are opportunities in the market, and shield you from the market when you are either emotionally unfit or the market is flat.
2. Opening several trades:
Some traders are in the habit of opening too many trades at a go, believing that out of the 10 open trades, 6-8 trades may hit profit. This is common among some traders who are pressured into over trading when they are falling behind their daily/weekly target.
They are suddenly hypnotized by Mr. Greed’s whisper..
“Psst, hey you, can’t you see there are so many trading opportunities in front of you, why ain’t you trading all of them?, remember, you got bills to pay“.
Before you know it, your trigger finger pushes the sell/buy buttons. minutes/hours later, you hardly believe that you actually took so many trades after seeing that your trading account is slowly bleeding out.
REMEDY:
I have a concept that helps me tame my own Greedy demon, and that is:
When faced with such a scenario, I have a checklist of what a H.P.T (High probability trade) looks like. So even when there are five good setups in front of me, I run a CONFORMITY SCAN through them.
I conclude by picking the best of those setups which are usually one or two, and then write down how I would manage one, or both trades. In such cases, I do borrow some powers from Mr. Greed, this helps me strike with conviction.
In some cases, such trade executions could fetch me profits I sometimes struggle to make in a month or two.
3. Greed induced stop loss:
There are descent stop loss’s placed by considerate traders, and there are also GREED INDUCED STOP LOSSES placed by unrealistic traders.
Greed Induced Stop Losses (G.I.S.L) are stop losses placed by a trader that only factors in the TARGET PROFITS or money to be made, rather than considering money that could be lost if the trade goes south.
-Fillipo Saga
Wrongly placed stop loss’s haunts most traders that still have a problem controlling Mr. Greed. He sneaks up on them and whispers:
“Hey, you can bounce back from those string of losses plaguing your account these past few days/weeks with just this one trade you know”
or
“Pssst, you promised your lady you would get her that beautiful birthday dress, but your profit is not adding up mate“
Before you know it, you have given in to that faded voice in your head. You either place a very stingy stop loss that could be taken out by a tiny price whipsaw or you risk too much on a trade, that you end the trade abruptly because you become too emotionally attached to it.
REMEDY:
The only way to place stop loss on trades like a boss, is to first consider how much you are willing to lose if that trade you trust so much, goes wrong.
This is very important because every random trade we pick has a 50% winning or losing ratio, irrespective of how accurate our past speculations may have been.
Secondly, you need to learn how to place great stop loss’s in your trades, if you really want to become a profitable trader. If you want to know more about how to place stop losses like a true Jedi trader, check out this article
4. Not having monthly targets:
This point contradicts the principles of a handful of traders I know, and their reason for not considering this point, can be further broken down into two opinions:
- You cannot tie a fixed return on investment every single month, simply because the market decides what it gives to you and not the other way around.
- If you set monthly target’s, you tend to either put yourself under too much pressure to perform under unfavorable market conditions or you may also run the risk of not inspired enough to do become a better trader each month/year, since you have a fixed target.
Either way, the fact still remains that: “You cannot build on what you don’t measure“.
Having monthly targets and achieving them is not cast on stone, hence you shouldn’t beat yourself too hard if you don’t achieve them.
Also setting targets based on your past trading performance and improving upon them has a huge effect in controlling Mr. Greed. Especially those weeks where you seem to outperform your set target, but still end the month with a loss, simply because you had no set targets, hence Mr. Greed takes over your trading
REMEDY:
I will specifically write on how to achieve better trading results by focusing on your monthly targets on a separate article.
However, note that setting realistic monthly targets for yourself and gradually scaling it up when you are comfortable enough with the set target, is a huge boost to your trading results over time
5. Not having other hobbies:
This is a huge contributor to why you are rarely having any wining month as an fx trader. Most traders spend their whole time, desperately trying to build their account by searching for trades even when it is obvious that the market is flat.
This particular habit feeds Mr. Greed by constantly exposing him to your charts and account. You watch yourself helplessly looking at a market that basically has no signals, and…woooop!!!
Right out from nowhere you start seeing setups that are about to set you up, just like a lost and thirsty wanderer in the desert seeing a mirage, you start picking trades after trades, even when you unconsciously know that the setups you are trading, do not meet your trading criteria.
REMEDY:
In order to eradicate this habit, replace your bored hours with hobbies. Try developing other hobbies during the days your system gives you no signals. You do not have to trade everyday in order to be profitable.
Don’t forget that the reason why most traders originally opt for trading apart from the financial reward is TIME. The beauty of being a trader is that you have ample time for yourself and other vocations if you will.
Use that free time to grow a hobby, and hey, who knows, you may end up carving out another source of income for yourself.
In conclusion:
Mr. Greed will continue to live within us, no matter the status you attain as a trader.
The only difference is:
While profitable traders have established a good relationship with Mr. Greed, who in turn assists them in multiplying their trading account.
Beginner traders will continue to be at the mercy of Mr. Greed, blowing one account after another, while completely oblivious of the beast within.
If you really want to turn Mr. Greed into your best ally, starve him, and gradually unleash consistency.
