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How to manage the tension between fear and greed

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Learning how to manage the tension between fear and greed is a necessary skill for traders.

But not many traders have been able to master this skill.

Extreme emotions bring out tension

I am writing this letter in a coffee shop, sitting opposite a man in his 20’s sobbing while his mom is holding and hugging him for comfort. I am also crying as I can feel their pain, but there is something unique and uplifting about this mother/son relationship.

This is not what I intended writing about but I have decided this experience was a message for me to comment on. What is interesting to me is how this mother and son are able to hold the tension of their profound sadness. For 15 minutes they have held each other in uncomfortable silence, but I can now feel a sense of peace and contentment in the air.

This is what Carl Jung wrote extensively about how to achieve transcendence from an experience.


Dealing with fear and greed

Ok Berman there you go again, what the hell does this have to do with trading? The truth is it has everything to do with trading. As traders we confront this uncomfortable truth every day. We are ruled by two emotions – FEAR and GREED that compete against each other the moment we place our trade.

The truly great traders are able to live with this discomfort and transcend with profits. A trader has to be prepared to lose if he wants to win. It is a fact of life that there is no trading strategy that only makes money, losing is part of winning.

Traders need to manage the tension within

I cannot provide you with a magic pill to overcome this tension. In fact I would say the opposite, learning to feel this pain and living with it is actually the secret source to great trading. The only advice I can give you is the next time you have that pit in your stomach don’t dismiss it rather feel it. Think about it. Write about it. Talk about it, and most important hold it.

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