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Greed is a form of fear which is the fear of missing out. So you need to control and face your fears in trading. The first step in overcoming fear is to recognize the various forms of fear connected with trading. The second step is knowing how to control those fears.

Have you ever thought why do so many people rush to the departmental store during the sales season? Is it the fear of missing out. Any kind of buying mania stems from the fear of missing out. People are afraid of missing out a good opportunity. This form of fear is a kind of greed.

Greed will overcome you when you see a potential opportunity in front of you. You are afraid of missing out a good profitable opportunity. Greed is another form of fear. This fear manifests itself especially during a sharp rally or decline of a currency pair in forex trading or the stocks in a stock market. Suppose you are interested in choosing a good currency pair for trading. You see on your computer monitor that the EUR/USD pair is making new highs, as it keeps on going up and up. You become greedy!

You start imaging that by entering into the market at this time; you can make a windfall fortune. Immediately buy, buy, and buy signals start ringing in your mind. Your heart starts pounding. Your pulse gets fast. You start feeling the acute pain of not being in the market when the EUR/USD pair continues to move higher and higher. Your mouth is watering with the thoughts of making potential huge profits. You dont want to miss out this opportunity. Others cant be wrong in buying the currency pair, you reason out with yourself.

This fear of losing out hypnotizes you into placing buy orders frantically. You start thinking, Everyone is buying and I havent. I am losing out a highly profitable trade. You have some doubts at the far back of your mind but you simply ignore them. You want to ride the trend just like everyone by rushing into it headlong.

These types of trading decisions are very dangerous. When most of the buying has been done, it compels you to enter into a trend very late. Be disciplined! The mindset, How can I not be buying/selling when everyone else is buying/selling, is extremely dangerous. Be glad to think that most of the traders are pouring dumb money into buying a currency pair that is already overbought. Always remember, Buy low and sell high.

There will be winners and there will be losers in trading. Trading is like a game. Sometime you will win. Sometimes you will lose some of your trades. You should know that the fear of losing out is the most prominent among the new traders. They get paralyzed by the fear of making a losing trade.

New traders dont yet have the adequate skills and knowledge to help assess and evaluate trading opportunities with a high level of confidence. This leads to trading paralysis. New traders become afraid of pulling the trigger when it comes to entering or exiting a trade as they fear losing money.

How to overcome this type of paralysis? Decide before entering into a trade, how much you can afford to lose. Use a stop loss order that is in accordance with your money management rules. Now you should not be afraid of pulling the trigger and being fearful of damaging the account based on only one trade.

It is very easy for traders to oscillate between emotional high and low during a trade. You should know that the outcome of just one trade should not affect your overall performance. Do not get caught up feeling invincible or pessimistic after a win or a loss. In the end, you should try to develop your own forex trading system that can give more winner than losers in the long run.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!