Forex glossary
Fear and Greed
Fear and greed are common labels for emotions that can influence a trader's entry, exit and position-size decisions. Fear may encourage premature exits, while the desire for more profit may encourage exceeding limits. Assess the specific deviation from the plan; feeling an emotion alone does not establish an error or inevitable loss.
Illustrative example
How does it work in practice?
In an exercise, a trader plans to risk 50 PLN but raises it to 150 PLN after seeing prices rise and wanting more profit. The journal records a threefold limit breach regardless of the eventual outcome.
A case to work through
Three journal fields
In a fictional exercise, a participant feels anxious but checks the signal and keeps the recorded limit.
- Record the emotion separately from completed actions.
- Compare actions with entry criteria and the limit.
What follows? Do not mark a breach based solely on anxiety.
Example boundary: This exercise does not diagnose a mental condition.
A useful distinction
Fear and Greed / FOMO (Fear Of Missing Out)
FOMO concerns missing an opportunity; fear and greed are broader informal categories.
Check your understanding
Separate the feeling, action and breached rule.
Show the answer and explanation
A skipped recorded condition
The action can be compared with its rule.
Recording and assessing decisions
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Read the fuller explanation
Related terms
Sources and documentation
- Fear and Greed in Financial Markets: A Clinical Study of Day-Traders – Lo, Repin and Steenbarger
Describes research on traders' emotions and decisions with sample-specific limitations.
Document read: - Making It Real – CME Group
Describes a plan's rules, motivation and risk without a success guarantee.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.