How Greed Can KILL YOU (and how to OVERCOME it)!

Hi, welcome to this new video. Today I want to speak about something that I consider very, very important in trading. Because it's one of the main reason for people to lose money. And it's not related to some technical conditions. Some fundamental stuff actually is related to greed because greed as other emotions can really affect the way we trade. And. And so they may force us somehow to take decision that we can regret later. And I want to show you a few examples of how greed may influence your decision making. The first one is this stock that is from the Hong Kong market. It's called Southern Energy. And here you can see the chart. It was trading in this range around 10 Hong Kong, Hong Kong dollars. Then it went up to 70. And then you may feel that it went down a lot here. But look what happened after that. Boom. He was trading at 10 and in one day, these are daily candles. It went to $1 and then it went down to 0.4. Okay? Now many people here will be scared and. And then what happened? If you look at the next candles, he was trading in that range and then it started slowly to go up, okay, from 0.4, 0.5 to 6, 712 dollars, 3 dollars. So what many people will do here when you see that the price is trading at $3, that by the way, maybe it's not clear from the chart because this drop was huge, but Moving from say 0.5 to $3 is six times, okay? It means that if you put thousand dollars here now, you will have $6,000. So it's a huge increase. Now many people, when they see that the price start to go up like that more and more, they will start to feel greedy, okay? They want to make money as well. They want to profit from that. And on the other hand, there is also the dual of greed. That is the fear of missing out because it's such a huge opportunity. You know, people are already making so much money. So then you enter and then what happened the next day? Boom, the price went down. So it went as high as almost $5. So it means 10 times from the 50 cent you will have made a gain. That is crazy. But look, it went down around 186. Now it's going up a little more. But what I want to say here is that if you look at this in perspective, you know, it's a huge increase. And entering around here when everyone is buying for the grid is very risky because people eventually will take profit and then you will end up losing money. Okay? So this is one of the examples where greed is actually very dangerous because you know that you don't have to buy high, okay? Especially when the price is going up parabolically. But you will feel that you're missing a good opportunity, so you will buy anyway. And when you take this kind of decision more and more, what is the result? That you end up losing money. Okay, and it's not the only example. I want to show you some others probably. Well, you remember bitcoin, similar story, right? The price was like trading in this range, 1,000, then 2, 3, then it started to go up more and more. And then he reached, if you remember, around the end of 2017, it was around 20,000. And. And at this point, I bet the same happened. People are feeling that they are missing an opportunity. So everyone buy. And then boom, it went down. Not as fast as the previous guy, but still. So what is the key lesson here? Same as before. You don't have to buy when you see an increase, a parabolic increase like that. Parabolic means that instead of going up with an angle that may be 45°30, something like that is going up like 90°. So you see, for example, here the price is going up like that. But compared to, compared to what happened here. You see, for example, the last phase here, the price was going up like that. So that's what I mean when I say parabolic increase. This is not sustainable. And that's why the price crash. In previous videos, I was also mentioning similar stuff for bonds and gold. And what happened to bonds? Well, same thing. The price was going up parabolically and boom, it went down. Okay? So at that time I was saying that it was not the right moment to buy bonds and gold because the price was again, parabolic. See the increase, it's not like the increase you have, for example, in this phase, you know, this phase here, you know, is going up like that, but here is going up like if you, if you go to this high is really, really in a short amount of time. Because this is like a few days compared to this range, right? You see that this range is much longer than this range. But the increase in price here is much faster than that. So that's why it's risky. Again, the price will go back and it can go back quite quickly. So it means you may lose money quite quickly if you buy around the top. Same was the gold. You know, we were also discussing about that and I was mentioning that, okay, it may be good to wait because now it's extended. Then it went down as well. And if you remember, there was Another video I made in the past where I was discussing, I think it was the palladium is one of the commodities and this is the chart. So what happened again? Same thing. It was going up, up, up and then it started even to gap up so fast and then boom, it went down. Now what happened after that is still going up. Good. We don't know what happened after that. But if you are trading so you have a stop loss, why is not a good idea? Because this will trigger your stop loss. Especially if you have gaps and you may end up losing more than what you expected. And even in the long term investing perspective, buying around the top is not a good idea because even though the price is going up later, actually the idea of a successful long term investor is to buy low. That's how you accumulate wealth during the years. So now you may be wondering, okay, so what to do if we see a situation like this? For example, Okay, for example, like let's check again. The Hong Kong stock, that was the most striking, I would say. So if you see again a situation like, like this one and you see the price going up like that, what, what should you do? My suggestion is the following. When you see that this is happening, you should have first something like set of rules that you follow for your trading. Okay? And this set of rules is something that you should look at every time before placing a trade. So you may write in very large size and maybe in bold, in red, whatever you want. Something like when this situation happen, don't buy and maybe even take a picture of this, take a picture of this kind of pattern. So you will know that if something like that happen, you don't have to enter. And also the other thing when you have to face the fear of missing out is to tell yourself that, okay, maybe that was a good opportunity to put some money here, fine, but this opportunity is gone and is not the only one. Every day in the market you will have opportunities to make money because there are so many stocks and so many situations that even if you don't make money with this one is fine. It will not really affect your long term profitability because you lost one single trade like that, okay? And it's much better to wait and enter at a much better price another stock rather than entering here with the risk of losing a lot of money. So with this, I would like to conclude this video. I hope you find it useful and I hope it will really help you to avoid this kind of very dangerous situation. Thank you for watching. If you like the video, as usual, you can subscribe to the channel and. And so you will be notified when I will upload new videos and see you next time.