What role does greed play in trading?

Greed plays a significant role in trading, especially as a driving force behind several common mistakes made by investors and day traders. Greed often manifests as the fear of missing out (FOMO), which compels traders to make hasty decisions, such as entering or scaling up a position without sufficient analysis, or failing to exit a losing position. This fear is rooted in the desire to capture potential gains from every trade opportunity, but it can lead to poor investment decisions and amplified risks. Recognizing and managing this emotion is crucial for making more informed and rational trading decisions 1 .