What is Greed?

/ɡriːd/

noun

Intense and selfish desire for something, especially wealth, power, or food.

What causes Greed to manifest in Trading?

• False Expectations (Yes, again)
• Hindsight (This affects the trade after)

Greed can be boiled down to these two factors, and most of it stems from, like most of trading’s other emotional fallacies, false expectations. I’ll explain it in the section below.

Hindsight

Take this from me, I have been trading for 3 years and nothing pisses me off more than Hindsight.

Imagine this, you exited a trade, were happy with your profits, and then checked the chart later only to see that price rallied to a point way higher than your initial profit target? Or you get stopped out by 1 or 2 pips, for price to rocket to your take profit after you lose.

This is what we call hindsight, which is the understanding of a situation or event only after it happened. In other words, acting like you knew how the trade would play out, after a certain outcome.

Common phrases associated with this in a trading specific context would be:

• “I knew price would have rallied higher.”