Text/Steve Burns Senior Trader
There is no better word than greed, for the lack of a better word, is good.
In the classic 1987 film Wall Street, Gordon Gekko put it this way.
In fact, a little greed goes a long way.
Greed will prompt you to work harder and thus get paid higher. It can also prompt you to save more for retirement.
But greed can also eat you alive... Even if you are the richest person in the world, you will suffer the same fate in the face of greed.
Greed, you're just one of seven deadly sins you've heard of from religious texts or popular culture.
(Trader's Note: The seven catholic sins are: "gluttony," "greed," "laziness," "jealousy," "pride," "lust," and "anger." ）
As you will learn, they all apply to trading, and if you understand them, there will be treatments.
#1 Lust
Lust is often associated with sex.
But there is also a desire for money and power at all costs.
For these two simple reasons, greed causes endless troubles.
Greed for making more money can take you more and more risks and put you at risk.
It can also push you across ethical and moral lines.
Remember, "there's no turning back when you open the bow," and once you cross that line, there's no turning back.
Cure
Replace your desire for money with the desire to learn.
As you become a more skilled and experienced trader, you may earn more money.
Therefore, focus on developing trading skills and gaining experience, rather than the skills and potential rewards of experience.
It's like dreaming of buying a Ferrari before you look for a job. It's really childish.
Let yourself grow and grow, have a positive attitude, and the rewards will come.
#2 Gluttony
According to a 2015 study by the Camelot Group, 44% of lottery winners ended up going bankrupt.
Why?
Because most people can't control or control this sudden wealth.
Traders are no exception.
Once traders are financially successful, they are tempted by all sorts of temptations, from overindulgence in food to luxury goods, cars, and mansions.
Upgrading your lifestyle means a significant increase in the cost of living.
But you should know that trading is an uncertain thing. You can't predict what will happen in that month or year?
Panic, frustration and inaction.
When you are faced with debts such as mortgages, car loans, etc., and you have 1,000 yuan left in your bank account, it is difficult to focus on trading charts.
As you make more and more money, the higher the percentage you give to yourself and your family.
Let's say after a year of trading, you have $25,000 left when you pay all your taxes, transaction fees, and bills.
If you're willing to spend $7,500 of that on "fun stuff," like buying new clothes, traveling, and having fun. Then the ratio is 30%.
However, you can reduce this percentage one by one, 25%, 20%... The exact number doesn't matter, the point is that by reducing spending, you can maintain adequate coping funds for tough things.
#3 Greed
For the sake of your kids, it's okay to want a bigger house, a better car, and a private school.
Dreaming of having $10 million more in your bank account is no problem.
But if you're just trading just to make money buying more stuff... Then go do something else.
To become a born trader, you must love the process of trading.
Staring at a computer screen for more than 9 hours a day, trying to decipher news, charts and price movements is not easy.
Most people are exhausted by this.
Revisit your true love of trading.
Is it the process of browsing 200 trading charts to find the market to talk to you?
When you close a deal, is there an adrenaline rush?
Or is it just simple fun?
The results of your trades are important. If they are not, then you should not be in the industry.
But it's just as important to enjoy the process.
Thus, transform your greed for money into greed for pure enjoyment.
#4 Sloth
Experienced traders often miss the "good times" of automated trading procedures such as high-frequency trading.
Many of these traders are in trouble because they complain more than they learn.
Instead of learning new skills, they are falling behind the market.
Evolution is a cruel beast.
It starts with the weakest traders, those who don't fit in.
It's 2021. The strategy you use today probably won't work in 3 years.
So what are you going to do in the future?
Continued education and personal development are arranged on a timetable.
Don't give yourself options that don't improve.
You can set a goal, like reading two books a month. Or learn 4 new chart patterns.
Or write 3 case studies of your best or worst trade of the month.
The possibilities are endless.
Don't forget to improve your non-trading self.
Some of the biggest trading courses seem to be learned outside the trading desk (desk), in sports or leisure activities.
#5 Anger (Wrath)
Angry traders are often the ones who have just lost money. Once you get angry, you usually lose more.
Because if you get angry, you lose patience.
If you lose patience, you'll make more bad trades.
If you make more bad trades, you'll become even angrier.
This is where "retaliatory trading" begins.
For example, one morning you lose $2,000 and are determined to "make up" it with more trades.
Before you know it, you've lost $5,000. Then there's $10,000....
Although you are able to clean up this mess and then leave your trading table.
Don't trade again unless your anger is gone from your system.
Talk to your friends, watch a fun movie, or take a walk, then slowly take the anger out of your heart.
If you feel like you're often out of control, you may need to seek more professional help, such as seeing a psychologist.
#6 Envy
On Wall Street, you can make $1 million a year and still feel poor.
Because the guy next to you made $2 million!
Traders are inherently competitive.
No wonder so many traders love sports, martial arts, poker, chess and video games.
However, many traders are obsessed with how to outperform their peers.
Teammates at the same table can also become enemies.
The person next to you is constantly making you "burn with jealousy." He spent $4,000 on dinner. Fly first class to Miami for a party on Friday.
The most he had in mind was "Which Ferrari should I buy next?" ”
He gets everything you want and it's eating you up.
Be kind!
If you know a few very good traders... You should make them friends, not enemies.
Because those good traders will teach you a lot of things.
Motivational speaker Jim Rohn said, "We are the average of the 5 people we spend the most time with." ”
He's right.
So if you want to be a great trader... A good first step is to make the traders around you better than you.
And chances are, you've gained the knowledge and ideas they can provide in return.
Smart, successful people are not threatened by sharing their knowledge. They'll be thrilled!
#7 Pride
Pride is the worst of the seven deadly sins.
When you think you're better and better than the people around you, be prepared to fall on your head.
The feeling of "I'm on top of the world" is a sign of vulnerability.
When you become too proud and proud of your own profits and losses, you have laid the groundwork for your "demise" step by step.
Worst of all, you stop learning because what you thought worked yesterday will work tomorrow.
If you're not blinded by past successes, you'll be well aware that your failures are a mile away.
But you didn't.
Slowly, your results get worse and worse.
You lose $1,000, then $5,000, and then $20,000.
By the time you realize where you're wrong, you're broke.
Instead of cheering on every successful trade you make, celebrate wise losses.
Let's say you drop $3 in Apple stock and reach your stop loss level.
You have an intuition that it's time to double down.
But instead, you follow your own trading discipline and accept stop losses.
Celebrate that you hold your gun like a soldier and avoid the risk of turning small losses into big losses.
The long-term value of trading discipline outweighs the short-term thrill of large trades.
So, you should celebrate your perseverance!