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Since I launched Explosive Options, I’ve talked a lot about how to handle fear when trading. But I’ve yet to talk about what happens when you become a greedy trader. So let’s dive into that today.Good risk management is fundamental to be a successful trader. If you get too fearful, you won’t make any trades (or money). Get too greedy, and you’ll make reckless trades, possibly losing it all.
What happens to greedy traders is never good
I have seen far too many traders take huge, unnecessary risks with their capital. A trade is going well, so they buy more options or shares. Or they hold onto a trade for so long that it turns into a loser. And remember, no one rings the bell and tells you when to sell.Greedy traders aren’t necessarily bad people. They are human and operate in a capitalistic society that says more is better. Too many of them equate their net worth with their self worth.So what happens when they lose it all?What would happen if YOU lost it all?If your net worth is your self worth, I urge you to reconsider your relationship with money. If you lose it all, it will damage relationships, your health, and your overall well-being. You could fall into a tailspin and watch your life go down the drain.Some greedy traders go in the other direction. They become obsessed with money and winning to the exclusion of all else – family, friends, hobbies. (If you watched “Billions,” you’ll recognize these traits in quite a few characters.)Either way, greedy traders end up with nothing. No money, no life, or both.I readily admit that I have been greedy at times. On more than one occasion, I have placed big bets – and lost big. I had to learn risk management the hard way!
Rethink your relationship with money
Today, my net worth is not tied to my self-worth. I have a fantastic wife who makes me laugh, two amazing young adult children who are forging their own paths, a wonderful circle of friends, and a new-ish hobby that I love – tennis. I am happy and satisfied with my life and how much money I make. Would I like to make more? Sure – who wouldn’t?Do you remember the 1983 movie “Trading Places“, which featured Dan Akroyd and Eddie Murphy? They played two characters with very different backgrounds. In the movie, they were put into situations where wealth led to new friendships, romantic relationships, and lots of spending. But when the money was taken away, the friends, girlfriends, and toys disappeared. The characters were forced to put aside their egos when they saw the other side of wealth – poverty – and managed to create their own happily ever afters.Evaluate your happiness – your true happiness. And if it’s tied exclusively to your net worth, it’s time to make some changes.More By This Author:Market Blast – July 29, 2024
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