Fear or Greed Are 2 Emotions That We Need To Be Alert To

🌟🌟🌟Fear and Greed are 2 extreme emotions that we need to pay attention to.  Fear makes us sell the bottom .  Greed makes us buy the top . Together they can wreck our portfolio leaving a trail of losses behind.

Tiger Brokers have a new trading feature called the Fear and Greed Index.  Currently it is sitting at Extreme Fear Level 8.  It is not surprising as we have a US administration that changes their policies sometimes by the hour, leaving the markets in disarray, not knowing what to expect.

Yesterday's market was one of  greed with buyers flooding back into the markets , making it one of the fastest recovery on news that Trump is pausing implementing the full trade tariffs and just having a blanket 10% tariff across the board for almost all the 185 countries except China.  China received a trade tariff of a massive 145%.  

Today the markets change course and resume their downward spiral.

Let's check out how Fear and Greed mess up our trades and even more important, how to deal with them.

Greed :The fantasy of catching a once in a life time trade.  Let's add some more to this trade, it is going to the moon!  Suddenly we are maxing out leverage on a hot stock.  Greed may not show up in the P/L right away .  At first it may reward us .  There maybe a few wins and perhaps we double our wins.  

Fear:  Suddenly  the market reverses.  We did not take profit because it is just a pullback.  The unrealised gains disappear .  We panic and sell at the bottom.

Fear and Greed are common feelings to experience when trading the markets .  How can we overcome them ?  By having a set of rules and being honest with ourselves .

These rules could be:  Having an entry criteria , determining the risk per trade .  Set stop placement and when to sit out the markets.

And if we break the rule ?  Learn from it .  There are no failures, only lessons learnt.

The best traders are not fearless.  They are just better at recognising when Fear and Greed show up and not allowing these emotions to guide their actions.

There is a saying in Wall Street:  Markets are driven by just 2 Emotions - Fear and Greed.  They will always be there .  Control them by building a system and that is how we can be successful investors.

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