Greed

Traders should not be ashamed to admit that greed is probably what motivated a lot of us to get into trading. After all, there is the promise of easy money or rather, lots of easy money that we can gain by trading. Greed may be good, but it will force the trader to make many mistakes.

One of the worst mistakes a trader can make is entering on a poor setup because "this could take off from here". You are afraid to be left out. This brings us to our first realization: Greed is just fear thats not immediate.

However, when you do get in on the poor setup, either because the signal bar was poor or because the pullback was too shallow or any other reason, you probably entered at a poor price point and a possible pullback will take out your stop unless you use a wide stop. From this we infer: Greed forces us to enter on a large risk

Often, even a large stop could be hit and you may resort to loosening your stop, which of course can still be hit so you end up taking a stop much larger than your profit expectation. A stop placement on entry is a statement that if the entry is correct, the price should never touch the stop. If you loosen stops habitually, you are not really trading with stops. Therefore, Greed forces us to disregard our stops

Some traders when faced with a wide stop will add on at the worse price so that they have a better chance of breaking even and a tighter net stop. This means that Greed forces us to throw good money after bad.

Ideally, you want to be very choosy about where you enter and understand that success lies in consistency (steady, higher percentage of wins) rather than depending on any one trade "taking off". The key to this is to take strong bars on deep pullbacks or at the ends of a trading range. However, if you do enter on a poor bar and it does not take off, remember that the first loss is the best loss. Take your loss and wait for the next setup. Refusing to accept being wrong and replaying the losing scenarios described above is the quickest way to a blown account.

"Be fearful when others are greedy" is a simplification. Fear is equally unproductive. The correct antidote to greed is caution. When you feel an urgency to enter, do not enter unless the signal is good and risk is acceptable.  Do not fret about letting a big mover pass you by. There is always another trade with a better signal in the very near future. Once you enter, let the trade fail if it needs to. You will never know what trades you are capable of reading and entering correctly if you don't let the market stop you out.