Fear vs Greed which actually loses you more moneyBTC / Tether PERPETUAL FUTURESMEXC:BTCUSDT.PKing_BennyBagWelcome everyone, to another educational article for anyone who wants to grasp the concepts of trading and the trader’s mind. Today we will look at Fear Vs Greed. Summary: Fear and greed, they interlock. They are the two strongest emotions in trading, and in psychology of trading. A majority of traders blame the market, their broker, their computer. The truth is though, nearly each loss happens because of their own decision making. Today we will break down: - What fear and greed really mean in trading - How each one can cause losses, or continuous losses - Which emotion actually costs the trader more money Definitions: Fear in Trading The emotion “Fear” in trading, is a natural response to potential losses, or misses. It displays itself as: - Hesitation - Fear of missing out (Also known as FOMO) - Doubt - Anxiety - Fear of being incorrect Fear usually causes traders to act too late in the game or not act at all. This can cause losses. Definitions: Greed in Trading The emotion “Greed” in trading, is also a natural response. It is the desire for more, than what the set plan allows. It displays itself as: - Overtrading - Breaking Risk Management rules - Holding trades for too long - Overleveraging - Breaking risk management rules Greed causes the trader to take TO much risk. Fear and Greed, how they link to Trading Psychology Both Fear and Greed come from the same place and mind. (Psychology) They are natural responses too certain stages of “Uncertainty” - Fear, aims to protect you from the pain of losses. - Greed, aims to maximize the pleasure from wins. Neither of which belong in a probability-based environment. How Traders lose money to FEAR Fear causes losses in many silent ways. Traders lose money when fear causes them to: - Leave valid setups - Exit trades early - Miss entries due to multiple losses - Chasing FOMO prices at the top Fear is not always passive, but it looks like impulsive buying, driven by the fear of missing out. Both hesitation and FOMO are just fear based decisions. How Traders lose money to GREED Greed causes losses in more “aggressive” ways, often a bit more destructive. Traders lose money when greed causes them to: - Hold trades with no defined take profit zone, (during short or longs) - Ignore stop losses when price breaks below - Increase risk after wins (Ego takes over) - Overleveraging positions The emotion of Greed, can convince traders that “just one more” or “a little more” is worth breaking the plan. When really, greed blows up the account faster than bad entries every could. Which loses more money? The answer depends on the trader. Some traders lose more from Fear, others.. Greed. But in the end, the core problem is the same. Both come from: - Weak Psychological control - Lack of discipline - Poor or ignored risk management As always, the market doesn’t punish emotions, it punishes emotional behavior. Same as if it’s to reward, it rewards positive behavior like patience, discipline, psychological control Final Conclusion | How to Reduce Emotional Losses Fear and Greed, will forever exist. The goal is not to terminate them, but to control them. Ways to reduce these emotional losses are: - Use demo or paper trading to build confidence without financial pressure - Trade with money you can afford to lose - Define risk before entering every trade - Follow fixed position sizing - Focus on Process, not profit (Mentioned this in my previous guides) Imagine the money you trade with, as money that is being burned in front of you. If you cannot accept that outcome before entering a trade, you should not be in a trade. Emotions disappear when risk is respected. I'd like to thank every one of you for your support over the last few months, I greatly appreciate it and I am happy to see that my posts are benefitting most of you during your trading journey. If you have any questions, or requests for the next post. Let me know in the comments below!