 Welcome back to the Trade Hacker Mindset. In this episode, I wanna talk about understanding greed. Trading the markets can be difficult to master and seemingly just out of reach. Professional traders have a secret. Trading requires total mental and emotional control. It requires the Trade Hacker Mindset. All right, so let's jump into this topic of understanding greed. As you may have seen in the last episode, I shared the recording of a coaching session that I did with Jared Tindler, who's the author of The Mental Game of Trading. And so along with that, I've kind of gone back and reread parts of the book, The Mental Game of Trading. And so one thing kind of, this happens to me every time I read Trading in the Zone or some of these other mental, discipline, trading psychology books is I always, something new always jumps out at me, right? I always start to resonate with something new that I didn't really necessarily remember the first time I read it. So which is cool because, and that's why I always go back and read these things because I always find little nuggets here and there that speak to me that didn't pop out the first time. So in chapter four of the book, he talks about greed and I love the quote that he starts the chapter with. It's a quote by Ben Stein said, "'Greed is a basic part of animal nature. "'Being against it is like being "'against breathing or eating.'" Now that spoke to me because I always feel like I'm in a battle with greed. The two major emotions of trading, fear and greed, fear has never been my biggest issue. I mean, sure there are different levels and different types, different variations of fear that come into play, but greed has always been kind of my biggest Achilles heel when it comes to trading. And so in this chapter, he talks about, there's confusion in the trading world about greed, like how to solve it. The solution isn't necessarily to be less greedy. That's like trying to be less ambitious or less motivated, but a lot of times greed has to do primarily with overconfidence. You know, when you feel overconfident, you feel invincible. It's that euphoria, like everything you touch turns to gold and so you become blind to the risk. So, you know, excess ambition or overconfidence in that way is negative when it comes to greed, but greed as a positive driver of ambition and wanting to get better at something is not necessarily a negative. In fact, it is a positive. It's something that's in our nature that helps us become better at things that we're trying to pursue. Greed can also come from a lack of confidence. You know, so nothing's ever good enough. You know, no matter how much money you make, no matter how much success you have, there's always this push for more money, more success, more admiration, more, more, more. And so if you get in a drawdown, for example, then that becomes the whole revenge trading, right? You're trying to get that back. You're trying to get back to even. You're trying to, you know, in the day on a positive note and all the things that us of traders that have gone through at least at some point. And then the other emotion of fear can also be part of greed as well, right? FOMO, right? Your fear of missing out. That fear of missing out is kind of a form of greed as well. So, you know, with trading, it's such an interesting dynamic because the whole point of trading is to make money, right? But the reality is that greed will cost you money. That desire to make more, you know, if it's unrestrained will cause you to suffer losses in the long-term and make you less successful. And the difficult part is that sometimes you're rewarded for being greedy, right? You're greedy, you're going for more and the market ends up doing what you want it to do and it rewards you by that profit. And so that just continues to incentivize you to be greedy again because you think back to, you know what, it happened that one time, I was greedy but it rewarded me. So it's kind of like the, you know, the mice who get rewarded with sugar water every time they do something good, you know, we're not that much different, right? We get rewarded by these different little serotonin drips of incentive and, you know, hitting a winner or hitting a big profit because we are greedy, that just reinforces it for next time. So from a definition standpoint of greed, it really boils down to an excessive desire for more, excessive, I think is the key word there. So going back to what I said in the beginning is that, you know, sometimes there's a fine line between ambition and greed. You know, Jared talks about, gives an example of Michael Jordan, right? He's just, he's kind of the epitome of what you think of when you think of drive, ambition, you know, someone who strives to win at the highest level. We never, when we think about Michael Jordan in that context, we never say, well, he was greedy, right? No, he was driven, he was ambitious. He was, he would do everything it took to win, but we don't think of that as being greedy. In fact, not only do we not think of that in a negative light, we think of it as a positive thing, right? We applaud that relentless effort and those, you know, going after your dreams type mentality that we see when somebody successful achieves something like he did. So the idea here is to think of ourselves as traders, think of ourselves like an athlete. And if we think of ourselves like an athlete that we're driven and ambitious, then greed becomes a performance issue, not necessarily a negative thing. Now, again, I mentioned it's a little bit of a fine line between ambition and greed because you know, there are certainly athletes because of the amount of money that they can make now where their drive is fueled out of greed, right? They have to perform because they want that next big contract. So part of it is intent, right? Intent matters. What your intentions are around that ambition matter and that's kind of where the line graze a little bit. And the amount of excessiveness that, you know, someone perceives as greed is really different from everyone. And you just, you know, you don't know if somebody is driven by greed. You don't know if they're driven by some other ambition. So it's really hard to see, you know, what the internal factor is. It really has to be something that you become self-aware of internally and not something you look at. You know, you see others look at you or something that you judge others for because what may appear to be greed for somebody else, it may just be a drive and ambition. So, you know, we never really know where that line blurs from one person to another because it's different for everybody. So the question is, where is that line for you? Where that ambition turns into greed? You know, if you probably already know the answer to that, but if you don't, that's something that you need to become self-aware of because just like any other discipline, like any other trading emotion, self-awareness is the game. In the book, Jared says it like this, when ambition reaches a point where decision-making becomes compromised, that's greed. So when you start focusing more on your P&L, you know, more on your account balance rather than the price action or the setup or the back test or that, you know, whatever it is that you're trying to follow in your trade plan, when you start focusing on the P&L more than that, that's when you know that your ambition is either already transferred or is transferring into greed mode. You know, a perfect example of this is something that just happened to me recently. So for those of you who were on the FOMC live stream on Wednesday, November 1st, we stream live during the FOMC and there's always a couple trades that I take during that and the first one was a winner, followed everything, you know, booked profits, good to go. The second one was a play to take advantage of the potential movement that we see a lot of time in the, during the press conference of FOMC day. And it played out just, I mean, perfectly. I mean, I put the trade on and the part of the plan was to take it off, take the entire trade off at 35% profit. Well, that hit within about 10 minutes. In fact, everyone else in the community that was attending the live stream got their 35% profit and we're done. Well, what did I do? I didn't follow my plan. In fact, I even said, you know, even, and even right before that, there was a question, like do we scale out or, you know, do you take it all off? And I was like, no, we, you know, we get in, once it hits that 35%, we close it out. I literally said that right after I entered the trade answering a question from one of our members and what did I do? I didn't do what I, I didn't even eat my own dog food. I didn't even do what I said that I was supposed to do. I got greedy. And so the market, basically what happened is as soon as the market started, got in, the market started moving down and I started having these thoughts of, oh, this thing is just gonna keep going down. And so instead of putting my profit target in at 35%, I just didn't put one in. And I thought, I thought I'm gonna, I'm gonna book way more than 35%. And what happened is as soon as that 35% filled, it went a little bit lower. So it would have been even more profit. I mean, I probably could have had a profit target in at 40 or 45% and that would have hit but I didn't even have a profit target in at all. And then it immediately bounced, price bounced. And, and I missed it. I didn't, I didn't get filled. Now I ended up putting my profit target back in at 35% to close half, but I was still convinced the market was going down. Just purely on gut feel. And it ended up coming back down. So I closed half my position at that 35%. So I felt a little bit better there. And, you know, as I talked about that vindicated me breaking the rules because, hey, I still got filled. But then what happened that really kind of continued to teach me the lesson like the market loves to do is it did hit closed half and then it bounced again and ended up taking a full loss on the second half of my position. So net, net, I lost a few thousand dollars where it should have been a few thousand dollar winner. I lost a few thousand dollar net loss of over, I think it was like $3,400. So that's a, you know, six, over a $6,000 P&L swing for, for that greed. So, you know, that, you know, some trades you blow off losses and it's no big deal. But that's one that stuck with me primarily because I didn't follow my rules, primarily because I, you know, it was one of those where you're just like, oh my gosh, what, what am I doing? I literally had the plan, it worked. I didn't follow the rules and the market punished me. You know, so those, those are lessons that they'll continue to happen. But the idea is to really hone in your, your mental skills to you continue to avoid those and do it less and less and less until you, until you, you know, I don't know that you ever fully negate things like that. You know, I think for me at least, the market has to teach me a lesson every once in a while. It has to come down and just slap me and let me know it's still in charge to kind of get me back in line. And, you know, I would, I would like to think that at some point I will ultimately learn the lesson not to do that. But I think that just knowing my own human nature, sometimes I just have to get that lesson every once in a while to get me back in line. You know, in the book says greed ignores risk and seeks to earn money without regard for edge, strategy or system. You know, and that's exactly what I did. I, I bailed on my system and just thought I could earn money without any regard for, for any of those things. You know, you start to, you start to get this blind optimism. You start to fantasize about the, the P and L number that you'll hit if it keeps going your way. You know, and that, and it wasn't the case for this specific situation. I mean, my, my trade size was small. It was well within my, my risk parameters, but there are times that, you know, you get over leveraged. You get too big a position size. You add to these winners. You know, you do these different things that will continue just to, you know, if, if you're not careful, that's how people blow out their account. You know, for me, I think a lot of the time greed kicks in for me when I'm on a winning streak. Right. When I'm, when I'm winning, everything I touch turns to gold in that euphoric state. But some, sometimes traders greed only kicks in when they're in a drawdown. Right. It's the revenge trading. It's them trying to get back to even because they had this amount of money in their account. Now it's down. They already messed up by breaking their rules. So why not just keep breaking your rules? Let's get this back to even and then you'll start following your rules again. Right. And has anyone ever found themselves in that situation? I know I have some other specific signs of greed might be like bragging about your profitable trades to other people. Right. Now, I mean, we're all guilty of this when we have a big day in the community. I mean, you know, I don't, I don't necessarily see anything wrong with this, but, you know, we loved it. We loved to brag about our winners. Right. We loved it. We love to show our winners. Now, I, you know, I've made it a practice, obviously that I show every single trade, winners and losers in my weekly and monthly updates. But I'm as guilty as anybody of, you know, if we have a big power hour posting, hey, I made this much money. I made this much money. Or, you know, what I've found myself doing, I talked to Jared about this last week was, you know, I've gotten in the habit of telling my kids how much I made. And so now they're reinforcing that. They're asking me, hey, dad, how much money did you make trading today? You know, that kind of thing. And so, you know, you got to be a little bit careful about that. I also have another, you know, a good friend of mine who's, he trades some. And so he's, you know, one of my close friends, really one of my only close friends that actually trades. And so, and we have always, there's always a competition going between us no matter what it is. And so, you know, it's always fun to brag to him about how much money I made. So, but you got to be careful with that because that can become a form of greed because then you start, you start reading your own newspaper clippings, right? You start thinking you've got it all figured out. And by communicating that to somebody else, it kind of reinforces that in your mind that, oh yeah, I'm so good. I made this much money. I'm, you know, I've got it all figured out. I know it, I know what I'm doing, right? And that's again, when the market likes to come back and slap you. So that's a little bit about the kind of the nature of greed, different forms of greed, signs of greed, that kind of thing. In the next section, Jared talks about ways of mapping your greed. So really, you know, taking very intentional time to pay really close attention to your patterns of greed, your thoughts, your emotions, the things that you say to yourself out loud, how you behave, the actions that you take, your perception of the market, all of these things, you know, documenting these patterns of greed. So this is something that I'm doing right now using specific worksheets that Jared makes available is documenting these things. You know, every time I have a situation where either I make a mistake or I am conflicted on a decision, I'm documenting that and I'm outlining these different things. And this is something that I've done in the past, but you know, sometimes we do this type of a process, it helps, we think we've got it all figured out in our mind and so we stop doing it. And so, you know, it's one of those things where it's kind of getting back to the basics, getting back to the process, getting back to the documentation and getting these things out of my mind onto paper so that they become more and more, so I become more and more self-aware of what's going on with my trading decisions. Because then what you can do is you can organize these notes, you can assign them levels of severity, you know, give them kind of a one to 10 scale of how severe they are versus how minor they are and it'll help just continue to integrate into your mind and help just naturally get you to, so when you're in a decision making process, you're in a trade, you're in the heat of the moment, those things come back to you. And you know, you know, even from a perspective of just a little thing like, ah, subconsciously, I don't want to have to document this in my notes. Right, I don't wanna have to, or like I use trade or sync to track my trades, I don't wanna have to flag myself with a mistake, so I'm going to make the right decision. I mean, just those little nuances, those little things have helped me tremendously. When I first started using trade or sync at the beginning of 2023, you know, I was flagging myself on a consistent basis with mistakes and different things. And over the course of this year, I've continued to do less and less, so I very rarely flag myself and it's just, part of it is just, when I'm in that decision making process, I'm like, ah, if I do this, I'm going to have to flag myself. If I do this, I'm gonna have to put that little pink red flag in my trade or sync platform saying that I made a mistake. You know, maybe it's ego, you know, we never like to admit that we make mistakes, and so when I do that, I have to admit that I'm making a mistake, and so just that little nuance has continued to make me a better, more disciplined trader. So anyway, I hope this was helpful. I just kind of a refresher for me on some of the different levels of greed, monitoring your greed, you know, finding different common signs of greed and ways to help not eradicate greed, because like I said in the beginning, greed can be good if it has the right intent, but if it doesn't, it becomes a negative, especially for your trading. So hope that was helpful. We will see you in the next episode.