Greed: Day Trading Pitfall

in Day-trading

Greed is actually among the day trader’s worst foes and day trading is almost, usually never successful at the end of the day if the day trader lets his greed influence essential day trading decisions. The other four damaging day trading emotional behavior are anxiety, boredom, melancholy, and fearfulness. Keeping a trading journal is one of the straightforward remedies for these bad emotions.

One may think that the primary reason a day trader engages in day trading is his greed for cash. The simple truth is that it is actually not. A good day trader has pre-specified objectives for every single day and deals to achieve each. For example, if he's preset an objective to gain $600 a day from day trading, a good day trader stops when he has reached his goal and lavishes on the reality that he has made the net income. Being a greedy day trader means disregarding preset targets in order to make even more money.

Greed provokes a day trader to do things he would not typically do. When things appear to be doing so well,a day trader’s greed could make him take too much ridiculous risks. When the price is rising high, he may refuse to let go because he anticipates that it'll continue soaring thus increasing his returns as well. The sensible day trader usually identifies a seven to twelve percent gain as a goal then steps back when this goal is achieved.

One option to conquer greed is to limit orders. When limit orders are used, securities are bought and marketed by the day trader at a much better cost. To understand more about limit orders, check out a day trading blog. Overcoming greed is also achieved by the day trader through having faith in his own trading strategy. According to Jesse Livermore, greed is always found in the person’s mind, waiting to leap into action and ruin the action. In this declaration, Jesse Livermore implies that a day trader’s own hardest foe is himself. No matter how good the circumstance appears to be, the good day trader by no means lets his defense down to protect against greed. Keep in the mind that when things seem too good to be real, it pretty probably is.

Defeating fear and greed requires a basic step such as preserving a day trading journal. It is similar to a typical journal with the exception that the trading journal is all about your trading day- information of your shares, commissions, and the techniques you implemented on that trading day. A trading journal is an effective strategy to overcoming greed however for this to get results, the day trader needs to be truthful in recording data about his day trading. The trading journal will ideally help a day trader analyze his day trading routine, lead him to look back at the times he did things out of greed and the consequences it brought and help him conquer this negative day trading emotion called greed.

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John Smith has 18 articles online

Day trading can potentially earn you some huge profit. Just do not allow the greed get the best of you. Make smart decisions.

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Greed: Day Trading Pitfall

This article was published on 2012/02/21