Fear & Greed — The Two Forces Behind Every Market

All financial markets — stocks, gold, currencies, crypto — are driven by just 2 human emotions, across millions of people:

Fear and Greed.

Price rises because people are greedy (they want it, they buy). Price falls because people are afraid (they want out, they sell).

If you understand these 2 emotions in yourself — you will understand the market, because the market is a mirror of your collective emotion times a million.

Fear — expressed 3 ways in trading:

1. Fear of missing out (FOMO) — covered in Chapter 2

2. Fear of losing → closing a winning trade too early You are up 15 points; the brain says "bank it, it might come back!" — you close, and price runs another 100 points. This is fear stealing your profit.

3. Fear of entering → seeing a good setup but not daring to click, because you just lost The same setup you once profited from, but today you do not dare, because "I am still hurting from the last trade."

Greed — expressed 3 ways:

1. Holding a winning trade too long — price reaches TP but "just a little more, it will go further" → price reverses → profit gone 2. Increasing size beyond plan — "this trade is sure, go in big" → destroys risk management 3. Trading too often (overtrading) — "I have not profited today, I must find another trade" → opening trades with no edge

The key — Fear & Greed swap very fast, even within one trade

Look at a single trade: - Before entry: greed ("this trade will surely profit") - Price runs against you a bit: fear ("about to lose, should I close?") - Price comes back to profit: greed ("see, I was right, add size!") - Price near TP: fear ("profit might vanish, close now")

In one trade, emotion swaps 4 times — and every emotion-driven decision is usually wrong.

The solution — decide in advance, while there is no emotion

This is the most important principle of this chapter:

> Good decisions are made when you are not in a trade — when there is no real money on the line.

Before every trade — while your head is still cool — you decide 3 things: 1. Entry — where to enter 2. Stop Loss — where to exit if wrong 3. Take Profit — where to exit if right

Write all 3 down (or set them in the platform) before clicking in.

After that — your job is to "do nothing." Let the trade run to the SL or TP you decided with a cool head.

Every time you want to "adjust" the SL/TP mid-trade — that is emotion trying to grab the wheel.

Warren Buffett said the sentence that sums up this chapter best: "Be fearful when others are greedy, and greedy when others are fearful."

But before you can do the opposite of the crowd — you must read your own emotion first: are you afraid, or greedy, right now?