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Thursday, December 11, 2008

Combating Destructive Greed as a Trader

"I know indeed how to be low on provisions, I know indeed how to have an abundance. In everything and in all circumstances I have learned the secret of both how to be full and how to hunger, both how to have an abundance and how to suffer want" - Philippians 4:12, The Holy Bible

As I mentioned the other day here on the blog? YouTube contacted me, after blocking one of my money management videos. I was under the impression that I was allowed to use under 30 seconds of any song, under the 'fair use' clause. Well, YouTube disagrees. I did not store those videos anywhere else; such as at Google Video, Metacafe, etc. Therefore, I will re-do these very important videos. At the same time? I get to improve the video quality.

I have railed on and on and on and on, regarding the fact that anyone who wishes to trade for a living? Must have a clear grasp and command of money management principles. In fact, these principles are so important, that I believe they can be of tremendous financial help to the non-trader as well.

But what will undermines anyone's ability to adhere to money management principles? What will destroy your ability to stick to a good risk / reward ratio? What destroys good reward analysis?

Quite simply put, it's a lack of emotional discipline. And one emotional response in particular that destroys emotional discipline, is greed. You cannot be greedy as a trader. It will wipe out your account faster than anything else.

Unfortunately, people who have an interest in the markets, in business, in the economy? Have been forced to listen to Gordon Gecko's "Greed is Good" speech for the last 20 years.

I personally believe that the "Greed is Good" mantra, is a load of crap. We discuss that in this vlog entry ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)

I will have another vlog very shortly as a follow up to December 4th's vlog entry of 'Trading for a Living' ...

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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