Markets change; human nature doesn't. In his 1926 book The Psychology of Speculation, Henry Howard Harper described the same two emotions that drain trading accounts today: greed and fear. A century later, they remain the invisible hands behind most bad trades.
Greed: reaching for the top
Harper warned that "many a speculator has been brought to grief by an insatiate greed for that coveted topmost point, instead of being content to sell at a good profit."
That's the trap of greed in one sentence. A trader is up nicely, but instead of banking a solid gain, they hold out for the absolute peak — and watch the profit evaporate when price turns. Greed shows up as:
- Holding winners too long, chasing the exact top.
- Oversizing after a run of wins, feeling invincible.
- Chasing moves you missed, entering late out of fear of "missing out."
Fear: the state of no limits
Harper was just as sharp on fear. He described how an uncomfortable position "keeps one in a constant state of fear, and fear knows no limitations; it contemplates and magnifies every baneful possibility."
That's the danger of fear: it doesn't stay proportional. A small loss feels catastrophic; a normal pullback feels like a crash. Fear shows up as:
- Cutting winners early to escape the discomfort of an open profit.
- Panic-closing trades at the worst moment.
- Freezing — unable to take a valid setup because the "what ifs" pile up.
Why they're so hard to beat
Greed and fear are fast, automatic and ancient. Willpower — the slow, deliberate "just stay calm" — rarely wins against them in the heat of a live trade. That's why simply knowing about these emotions doesn't fix them. What works is designing your trading so a single emotional moment can't do much damage.
Warning
The market is engineered to trigger both emotions at the worst times — greed near tops, fear near bottoms. Expect them, and never trust a decision made in their grip.
How to trade against them
You beat greed and fear with structure, not sentiment:
- Set a take profit in advance — greed can't override a target that's already placed.
- Set a stop loss in advance — fear can't panic you out of a plan that's already defined.
- Fix your risk per trade so no single trade feels like life or death, dulling both emotions.
- Follow a written trading plan and judge yourself on whether you followed it, not on any single outcome.
Risk
Most retail traders lose money, and greed and fear are the reason as often as bad analysis. Assume both will visit every trade — and build rules that decide for you before they arrive.
Rehearse discipline before it counts
Emotional control is a skill you practise, not a trait you're born with. A regulated broker with a free demo lets you rehearse setting stops and targets — and sticking to them — before real money makes greed and fear expensive.
Pepperstone
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