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Greed

The emotional drive to squeeze every last tick out of a trade, often turning winners into losers by refusing to take profit.

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Greed is the emotion that makes you hold a winning trade longer than your plan dictates because you are convinced it will go further. It is the twin of fear and just as destructive.

At the screen: price hits your target, you move the target up. It hits the new target, you move it again. Then it reverses and you exit at breakeven or a loss on a trade that should have been a clean win.

The antidote is pre-committed targets. Write the exit price in your journal before you enter. When price gets there, exit — at least partially. Letting a winner breathe is strategy; refusing to take profit is greed with a strategy-flavoured disguise.

Example

You buy a stock at $50 with a target of $60. It reaches $60. You hold for $65. It reaches $65. You hold for $70. It reverses to $55 and you finally sell, having turned a 20% gain into a 10% gain while watching the whole thing unfold.

#emotion#mindset

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