Bitcoin Forum

Risk management in trading, I believe, is a skill and a discipline that every trader must-have.

The absence of risk management in a lot of trading systems today has led to lots of blown accounts. Now, what makes traders find it hard to follow risk management since it is very important?

The #1 factor causing this is Greed.

In my opinion, Greed is just one psychological factor that causes havoc in a trader's journey as it opens room for other trading errors.

With Greed, you find yourself overleveraging, putting on trades that are not ready, in fact you will be too greedy to set a take profit because you ant more and more from the market.

Greed is one factor that messes up one emotional discipline and gives room for irrational decisions.

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.” – Victor Sperandeo.

What other factor do you think ruins risk management? , share your thoughts and experience!  :D

Yeah we can say that greed and ego are the two biggest factors that force the traders psychology not to use risk management and not to use stop loss or cut losses. It has been seen that people have burnt their accounts multiple times but still they are hesitant to use proper money mangement strategies out of greed and their egoistic approach.

Yes, you're right. Ego is one big thing.

I always had an ego for a very long time in trading. Till realized I needed to do the needful to be successful as a trader.

I may have a different opinion, but i believe that most times it is not about ego or greed when risk management fails.
Most times during trading, the market moves away from the predicted movement and does something entirely, which SL cannot stop, and it doesn't matter if you run a risk management plan or not.

it may be true but most traders of course wanted good returns during their trading, so they always predict in favour of them. they act according to what they thought will happen but its the other way around. if a trader will just be conservative with his calculations, he will not lose a lot of money, if in case he will lose that particular trade. but of course, the reality is different.
when you are already in the market, you suddenly change your decisions for the hope that you will get more money. i think thats where most failed, changing their strategies when they are already in the trading market.

Greed isn't that negative of an attitude. Although it is mostly negative at times (if it goes overboard), it can be actually helpful sometimes, so fully blaming Greed isn't entirely correct, but it isn't entirely wrong either. Risk management plans are in the end, just plans, and plans are bound to change IF and only IF someone actually understands how the market works.

There are times that you need to trade even though your plan says no all because of the fact that there's a chance and a high one at that. IMO, most mistakes that actually happen in trading is because the trader fails to understand the movements, well I mean, no one does most of the time but I'd say that he was just unlucky it didn't go as what he planned. IT is important though that he could minimize any losses that he got from changing plans though.

P.S. OP your BTC profile link in your linked post doesn't work. Just sayin.

greed is the biggest thing for traders which increases risk for them.

I agree with you OP. Greedy is the biggest problem that every trader face, and even the pro trader will have the same problem. But if we still stick on the target price that we want, we will have a chance to eliminate the greed because we know that when the price can jump in a short time, the price will not stay on that price for a long time or the price will not always increase higher than that price.

We need to see when we need to sell the coin, especially if the price can touch the target price want, and don't expect to see the price will always go up more than the target price we have. Yes, it is hard but we need to try more and more so we the greed is not posses us and prevent us to make a profit while we can.

If we stick to a target price then we will need to hold for long term investment and eventually it will decrease our investment risk.
but most people do not understand this.

You are absolutely right OP, once a trader starts to be successful, they'll keep on pushing to make more and more money

The fact is most trader become greedy when they see the price jump, and I already experience that before in my beginning of trading. At that moment, I am missing the best moment to sell some coins at the very highest price, and I can make a big profit, but then I realize that the price cannot still increase, but that is too late. Although that is too late, I can make a profit, but that is not bigger than the last time of the highest price.

From that experience, I always try to remember to close the trade whenever I see the very highest price, so my profit can be at the top rate. That is one of the best lessons for me that I always keep in my mind.

Risk management isn't very easy task for traders. If a trader lost funds during trading then its effect psychologically and he become more crazy to recover his funds. We have lack of patience and greed is another dangerous behavior for traders. You may proceed to risk managment only when you may control your emotions & greed and trade with patience. I believe only professional traders with high skill is able to done their risk managment. For general traders like us, most complicated things.

This is why 90% of people should not be trading. ;)

I honestly understand why laypeople compare day trading with gambling, because that's literally how most people treat it. They enter trades with no plan based on greed, they exit based on fear, they don't back test their strategies, they let losses run, they double down using leverage, etc.

It's no wonder Wall Street chews up retail traders and spits them out. Trading is very challenging psychologically and requires rigorous rule following.

You're probably referring to the emotional aspect of being impulsive and not greediness for it's our nature to have a sudden and unreflective urge to act if we find things in an instant is favorable to us without any second thought. Though I may say that greediness is the main element or the endmost factor that a trader loses their risk management but there are still some reasons why it always happens like being impulsive and having a less strategic plan that gives them a wrong response to any sudden changes on the market.

In the end risk management in trading can be considered as the best tool and could be the worse depending on how we handle it.

Most of the pro trader has the mindset earn more and more profit after a successful run because no one else will be contented to a single success if trading is your source of income? This so called Greed factor that OP mention are for those traders doing leverage trading with high leverage which is obviously not in the traders official handbook.

The #1 common cause of traders loss of money is the patience to wait on the perfect opportunity to enter and exit in trading. I believe TIME is the best factor that affecting traders risk management considering that traders that we are talking about here are PRO traders and not those casual traders that don't have any idea on the fundamentals of trading.

Yes, but if you're willing to do that, you can achieve that. Risk managent is necessary and you need to deal and do that for your own improvement in trading. Most of us here are so stubborn when it comes to following risk management, we need to improve our self-discipline in order to become more effective in trading.


That's the reason why we also need to practice controlling our emotions and avoid those kind of mindsets. If you are greedy enough to recover your less, that will make you double it. It is not easy to perform self-discipline, yes, but you also need to work hard for you to achieve it. Attitude should not ruin your trading, always practice those things whenever you trade.


But everyone of us can grow more in trading, learning has no limit. All of us can improve and become an effective trader, we just need to practice it every time we perform our strategies before and during transactions. Experience will give us more lesson and we need to reflect on the results of our trading. All of us can perform risk management if you are willing to minimize your risks, remember that.

The real hard thing is when they change the way they made more money to try and make even more money. You figured out a way, you are profiting, why are you changing this? I have seen too many people who did regular buy bitcoin, hold it, sell when its higher type of deal which is simple yet works most of the time, if you know when to get in and when to get out that is a perfect way to make a profit.

They then go into altcoins, they go into ICO, they go into leverage trading, all of a sudden they are on 10 different methods and they are losing like crazy. Anyone with a smart mind would know that if you are doing something and you are good at it, do not try to change too much of it and make it into something bigger and fail, just keep at it and you will be fine with what you know already.

I can confirm that this is the case.

I'm wayyyy too greedy...

One of the things traders have is that when they make a profit in a trade, their greed increases. They then take some trades, without proper analysis. The result is very bad, he loses even more than what he made profit. As a result of this loss, it’s effect psychologically. He then makes the wrong decision to recover the funds.The trader moves to high risk margin, leverage trading to recover funds in less time. But this turned out to be another biggest mistake, and eventually loses all his funds. In fact, greed is more prevalent among traders who have less patience. So the trader who can control his greed can be a professional trader.

The human element is definitely the hardest thing to move past when trading. I'm a big fan of tools that help you stick to your strategy, whether it's a PineScript indicator on TradingView or your own custom spreadsheet or something else, a tool lets you write the rules once and remind you that you are or aren't following your own rules.

Greed would be on no. 1 spot. Next,?

 Emotions yet this one would really be one of the most common enemy when you do trade because you cant easily fight when your emotions are already involved.

Yes, your experienced one but doesnt mean that you wont really be getting affected by this but somewhat due to knowledge into things you are already aware

on what would be your next move but it cant really be avoided that breaking out your own plan or goal or havent been followed just because you decide for another
route or path.

It depends though because some might really be a beneficial one but most of the time those immediate change of plans are caused of panic or being too worried.

Greed is always tied with the lack of patience,which is the second biggest obstacle for proper following of a risk management plan.Trading is all about controlling your emotions,just like playing poker.If you show emotions,you lose.If your emotions start to control you,instead of you controlling them,you just keep playing with weak cards and you keep losing money and getting into more debt.Crypto trading is exactly like playing poker.If you lack patience,you are just missing the right moments to sell or buy,which lowers your potential profits and can increases your losses.

In other words, FOMO is an example of greed. FOMO is Fear-of-missing-out. You are always scare that if you don't follow the trend, you'll miss a chance to earn profit. However, you have to be really wise in that situation. Judge any trend carefully with your knowledge and skills, don't just follow others. Many trends are created by the whales to direct the market for their own behalf.

Yes. FOMO is something that a greedy person always do because of wanting more and more profits that sometimes will be the only cause of your huge loss. Not all the time that we should FOMO all the opportunities that comes in the market thinking that it would not come again. Sometimes we should try to control our emotions and not to take decisions that would only lead us into failure.

I agree mate. Because of emotion we tend to break our own trading strategies. I think if we trade like a robot (emotionless) using our proven backtested strategies and always stick to that rule. It will be profitable.

I'm a trader too and one of the most problems I see on my self is getting greedy but I take to manage this kind of actions because we all know in trading there is a lot of opportunities to make more income with the use of it but it requires a lot of knowledge and skills needed to have this kind of possible high earning sometimes if we have a lot of market income to our trades we become a more greedy and except more than the market price of the coin will go up and the cause we need to wait more time and sometimes those times the market price of the coin is falling down right now and some of us getting panic and don't think what is happening and we need to do and immediately close the positions. Instead of having a good market income the result you lose half of the profit you have before because of getting greedy which is a not good profit. If you think you already gained profit take it out instead of holding this money that causes more trouble to you instead of having a good outcome.


It is better if we join into the world of trading we must need to set a aside the emotions because sometimes it may cause too much fear and getting scared and pull out the position we have.

Yes, traders may go for relaxing their own predetermined restrictions when they are getting greedy. Your risk management will become void if you're not good in emotional control. A professional trader has become groomed up to that height only because of they are strictly following all their predetermined plans and regulations. When you keep on relaxing your own rules then the chances of becoming professional trader will be getting minimized.

There are a lot of possibilities for getting failed emotionally while trading but we can avoid all such failures through our experience. It means when you are gaining experience on trading then you can become good in your risk management plans. It is a long-term process so we must have patience in learning all the required things.

Emotions are definitely a big play here. People do end up acting a lot more emotional than they normally do when they are doing a trade. I can't count how many times I stopped and checked what I am doing 50 times before actually clicking buy or sell. I end up doing nothing wrong but I start to feel like maybe I don't do anything wrong because I check that many times but I rarely ever change anything from the initial input.

So, there is a lot of emotions involved, it is a stressful thing for many people, if you are a professional you might feel at ease but there are tons of people who feel like maybe this trading thing is a bit more stressful. Tons of people even stop trading all together to relax. Hence I think all the risk management flies out the window as soon as they get a bit more stressed than usual and panicking.

The problem is, traders don't keep their emotions aside. Greed is one of those emotions. Money doesn't come to emotions but deeds, right deeds. But traders run behind money so much that they forget to calculate their risk:reward before moving forward and regret later (I've only seen people regretting their decisions taken under the impact of greed). Greed steals your power of thinking effectively on how to manage your money and how much to use in a trade and how much to save, but thinking that "Oh yeah, I can make a few extra bucks if I pull in extra money on this trade". That way, most traders lose a lot.

There are things you can control and things you can't control in the market.
Risk management is one thing you can control. The market has nothing against you if your risk management plan is good enough.


You should be consistent with your approach to the market.


In relation to Risk management, i think greed is the first factor.

Thanks! I corrected that. But it shouldn't be classified plagiarism since it is my content.


Good point! we improve everyday as traders.


Not everyone wants to hold trades :)



greed causes FOMO!


Trading isn't meant for everyone. That's one bitter truth!


Pro traders make money steadily and slowly increase their position sizes such that it fits into their risk management plan.

This is not greed!


It is easily said than done.  :)


Consistency is key!


Help yourself so your wallet remains Robust  ;D


Side effects of greed.


Everyone still experiences emotion. Provided you're human, you can't escape it!


It is better if we join into the world of trading we must need to set a aside the emotions because sometimes it may cause too much fear and getting scared and pull out the position we have.
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the sooner you comply to certain terms in trading and see the market for what it is, the better trader you are.

For me, One of the major factors that cause people completely ignoring their risk management plan, Is basic FOMO. (Fear of Missing out) I saw a handful of new traders ignoring the risks just because of a guy who profited on a trade and they think that they can also do it. It's basically being greedy. You thought that you can profit because a another guy did so.