Practial Vedanta and Trading – How to overcome greed
Hello traders, and welcome to Practical Vedanta & Trading video series. In this video we are going to be looking at how do you overcome greed. My name is Thiru Nagappan here founder of Master the Markets, Elite Traders Conference, and Traders Open Day.
How do you overcome this thing? This big words in the trading world fear and greed. First, it would be good to understand, what is greed? We would say in terms of the mind as mentioned on the previous Vedanta videos, the mind is a flow of thoughts. Whenever you have greed, you have more than one thought. What is it that greed is all about? What is the thought that we are putting a lot of energy on? It is the thought of wanting to make more money.
When does this greed arise in trading? First; we established that greed is more than one thought in the mind, which makes it agitated and out of focus and makes us forget our plan in trading. Next, when does it happen that more than one thought comes? For example; you have a plan in front of you and you want to execute the plan as traders. You want to follow the plan, so the stats will be valid, and you can reproduce your results. However, emotion comes and wipes all out. So, when does it all arise? The usual scenario in trading is when you have got something when you entered, and it is going high up near your target, with good momentum and velocity in price, and you want to hold onto the trade. You want it to go further because you think it can make you more money. Then is when the greed comes, because we step aside of where you want to take your money and get out. If we know when this arises, then how we overcome it.
Before we ask ourselves how to overcome greed, we have to ask why we want to overcome it. The why is very simple, is it not traders? what happens with greed. The trade starts with velocity, but suddenly, it starts to turn around. Then, you wish you would have taken your profits. At least, I could have got my equity curve a little higher-up and not eaten-up into my into my losses and increase my losses. So, we know why we need to overcome it. How? It is then the question. First, the mind is segregated in two thoughts, intellectual and emotional. Intellectually, to overcome greed, we need to be statistically objective. You need to know your stats on why this is the right place to take your target, what percentage of trades hit that target and turn around. What is the 80% probability of hitting that target, all the stats you must have. One of the most important words that we have, that we talk about on the trader’s basecamp where we go in much further detail and in videos we talk about it as well, it is called “open equity”. I want you to do some research and look into that word. Based on open equity, you can get a statistically driven target. That is on the intellectual side of the mind.
The second point is the emotional basis on how you can overcome greed. That means to get at peace with yourself and being content with your profits. How do you do that? A certain shift has got to happen traders, which is why I got a smiley face over here. You first have to understand, what are the main reasons people get into trading and why greed comes in. Because you are naturalistically driven to want more money, and buy that flashy car, or the flashy tv, flashy clothes, or whatever it is. The mind is never content, it wants one thing after another. It wants bigger and better things and in comparison, as well. So, how do you get to a neutral point? How do you get to a content and peaceful point? That is when the smiley face comes in again. Happiness comes from within, bring the mind back inside. It is always running to the outside with too many thoughts and agitations. This allows for a higher chance of greed, because, greed is multiple thoughts and never a single thought. You have seen how we get to this happiness within; because when you come from the stand point of the happiness comes from within, when the mind is still you get happiness. When we get those things the mind experiences happiness, thereby, if we can get the stillness of the mind without those external dependencies then we can understand that the happiness is inside. When the happiness is inside, and it starts from within, the mind is more present and less thoughts come in. Therefore, there are less chances of greed coming in.
Therefore, how do we train the mind to be more within rather than outside on the external world? We can achieve this using meditation. Why is meditation important? Even Ray Dalio, owner of the biggest fund of over 160 Billion Dollars, he talks about meditation. He meditates every single day. Meditation helps you align the intellectual part of your mind and the emotional part of your mind. Intellectually you may have it all on paper; like for example, where you want to exit a trade statistically and you are convinced about it. However, emotions still come in and then you do what you are not meant to do, and you take a trade or let it run. Meditation helps you align the intellect and the emotion, so you are in peace and content when you get out of the trade. For example, if you get out of a trade and it runs higher you will still be content. Because you know that was right, and happiness comes from within. Therefore, you do not have to chase trades. Even when you maximized the profits on your trade you will feel happy, and not like you mastered the trade and you are the best in the world. It is a numbers game, and Vedanta is about continual orientation and alignment of the intellectual and the emotional side of us, and going after the core which energized the two parts of the mind which are thoughts itself.
That is all from me today. Reflect on this, digest it, and put it into action. As we always say; stay disciplined, follow your trading plan, and keep Trading Like a Master.