*Thread*

GREED.

It's been a while since a thread, so here we go.

Hot topic for right now, money is flowing, you can't seem to put a foot wrong, the market is going up, good times are rolling.

Don't let that get taken away from you. Let's explore how to approach this time.

These environments make it very easy to become greedy. This takes form in a couple of ways (sometimes without you recognising that it is greed):

1. "I can't close yet, we could go higher!"

This is a very good point and the next section of tweets will be about this.

Jesse Livermore said: “As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.”

I agree with the sentiment but think it's wise to maintain a level of reality around this process.

So how do you know when to take profit?

Well, this is a subjective point, assets in price discovery you can consider moving your stops to prior lows. You can leave a small amount running and take some profit. What you're doing is protecting yourself.

Don't let the market take back your profit with sharp moves down.

The other way to look at profit (and although not discussed often, I used to use this approach regularly) - what does a lot of money look like to you?

If you have a $1000 account and suddenly thanks to a big move you're $3000 up, why are you not closing?

I used to use $ value as an important measure of my greed. If suddenly I was being handed a monthly salary in one trade within the space of 24 hours, I would close the position and lock in the money.

I'd find this incredibly helpful in keeping rational on the market and profit.

Now that's all well and good, but it doesn't address greed and the need for more. Or the fear of missing out on further movement in an asset you've closed.

Well, good news. There are hundreds of assets. Take your new found profit, look for other opportunities.

You have to distance yourself from assets you close trades on. If you made money, that's a positive, not a negative.

We can view "early closes" as a negative thing when in reality you're turning something good (making profit) into something bad (greed on missing out)

So remember:

- Use your closed trade as a way to analyse "what could I do next time to lock in profit but remain in the trade?"
- There are hundreds of markets
- There are hundreds of set ups
- You made money
- You increased your balance
- You beat the market

A lot of discussion for point 1 but let's look at 2.

2. "Everyone is posting huge PnL, I want to be like them and I want to increase my position sizes to take advantage of the conditions."

Oh boy... Here we go.

Alright, firstly, fuck everyone else. You focus on you. You don't get poorer when others lose trades, why should you be bothered about getting richer when they win trades.

Other people's approach, entries, exits and profit is of no concern to you.

You matter. Not them.

Next, increasing your leverage or position sizes in this environment produces what is referred to as the "wild swing"

Up $3k
Back to breakeven
Up $2k
Back to breakeven
Up $5k
Down -$1k

Usually thrown in is the thought "I have to stop this" before entering another big one.

These wild swings are not trading, they're gambling with smaller balances in the hope that you benefit from the conditions. It's greed, it's irresponsible and you're better off not trading.

The volatility here will kill overleveraged small accounts. Do not be a victim.

We see assets like $XTZ moving 8% down before swinging back up - if you're in a big position you're stopped/liquidated before watching price move in your intended direction - it's a crushing feeling. BUT it's also a feeling you should bottle and remember to stop you doing it.

We often don't spot greed, it doesn't manifest itself as something you identify as a "greedy mindset" but in these conditions it's everywhere.

Make sure you're taking steps to BE SENSIBLE. Realise that you're not going to get rich overnight without a huge financial gamble.

Those who are playing things steadily and safely are in the best possible position. Holding assets has been an incredibly positive process vs trading. Overleveraged positions and moving into big boy shoes has been punished and will continue to be punished.

One final point. Keep your finances in reality. Stop dreaming of $100,000s of profit if you have a small account.

Got a hobby? Relate your profit back to it. Make $400 in a trade? That's a brand new Xbox and games. That's a brand new skateboard. That's a new soundsystem.

Keep everything you do grounded in your own reality. Not the reality of the traders you see on here. Look at your own life, your own finances and make the decisions that will benefit you.

Greed will ruin you at the worst possible time.