Fear and Greed: The Two Emotions That Drive Markets

Fear makes you close winners too early and hold losers too long. Greed makes you overtrade, oversize, and chase moves. Every trading mistake can be traced to one of these two emotions. The goal isn't to eliminate them — it's to recognise when they're driving your decisions.

• Closing winners early: 'I better take profit before it disappears' — fear of losing unrealised gains
• Moving stops: Widening or removing stops to avoid being stopped out — fear of being wrong
• Not entering valid signals: 'What if it goes wrong again?' — fear from recent losses
• Revenge trading: Aggressive entries after a loss — fear masked as aggression

• Oversizing: 'This one is a sure thing' — risking more than your plan allows
• Overtrading: Entering marginal setups because 'there might be a move'
• Chasing: Entering after a big move has already happened — greed for the profit you 'missed'
• Holding too long: 'It'll keep going' — not taking profit at target because you want more

• Rules-based trading: Pre-define entries, stops, and targets. Execute the plan regardless of emotion
• Position sizing: Small enough that fear doesn't kick in (1% risk)
• Journaling: Write down your emotional state for each trade — patterns will emerge
• Breaks: After 3 losses, step away for 24 hours — fear and greed compound with fatigue

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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.

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