“No-one cares more about your money than you do.”
Trading when greedy – continued.
In trading there are four animals:
- Bulls – Bulls believe markets will rise.
- Bears – Bears believe markets will fall.
- Pigs – Pigs are greedy.
- Sheep – Sheep are fearful.
It was Churchill that said, “dogs look up to us, cats look down on us, but pigs treat us as equals”.
Why do pigs symbolize money?
In pre-famine Ireland, pigs were called “the gentleman who pays the rent” because raising and selling a pig was the primary means for a family to earn enough money to pay its dues on potato plots. Befitting their elevated status at that time, many pigs slept near children in their own straw beds.
Some interesting facts about Pigs :
- Pigs have the capacity to consume a human body in eight minutes. To accomplish this in one sitting, approximately 16 pigs would be required. They can process a 200-pound body in about eight minutes, implying that each pig can devour two pounds of uncooked flesh every minute. This association with greed is encapsulated in the expression “as greedy as a pig.” in the realm of trading, one is either a bull or a bear, as these groups are known for making profits.
- On the contrary, pigs or greedy traders often subject to losses and are metaphorically said to get slaughtered in the market.
- Pigs are one of the smartest animals on the planet. Their intelligence ranks higher than dogs and even some primates.
- In their natural state, pigs are very clean animals. They keep their toilets far from their living or feeding area.
- They are much more tolerant too cold than heat. Pigs have no sweat glands; hence they enjoy being in the mud to keep themselves cool.
- When trained, pigs can understand signs and sounds of humans to get a reward. They can also solve problems faster than dogs.
- Pigs use their grunts to communicate. The grunts vary depending on the pig’s personality and environmental context and can convey important information about the welfare of this highly social species.
- Pigs have very good memories. Not only can they remember things after a long time, but they can also prioritize important memories.
- Newborn piglets learn to run to their mothers’ sounds, and mother pigs can communicate with them through grunts whilst suckling. Scientists have found that piglets have a certain teat order, and every piglet has its own teat.
- They like to get massages. Under natural conditions, they use trees for rubbing themselves. They also like to relax while listening to music, and are very curious animals appreciating different enrichment toys.
- The highest density of tactilereceptors is foundinthepig’s snout. They have over 1110 olfactory receptors. Pigs use their snout mainly to dig in the soil and search for food. A pig’s olfactory sense is about 2000 times more sensitive than a human for certain smells.
In trading terms :
Greed is often a result of many consecutive wins in the market when the trader feels this overwhelming feeling of overconfidence. Imagine a few consecutive wins and the thought that goes through our minds is one of “I don’t get it wrong, I know what I am doing” so typically two things will happen.
- A trader will be tempted to increase their position size, ignoring their trading plan, which incorporates money management rules, often trading at a size that is too big according to the available trading capital.
- “Overconfidence” and “greed” results in a trader believing that they cannot get it wrong and then stop losses are ignored or moved . This problem is often compounded as the position size is also too big. A negative draw down results in a trader stopping trading, hoping that the market will turn in their favour.
“If you stare at the screen for long enough, you will see what you want to see”.
A typical real-life example:
- Seven winning trades in a row, at that point the account was profitable by over 2%.
- Notice how suddenly the position size was increased and stop losses ignored/adjusted (can be seen in the individual losses).
- The stops were eventually taken with a draw down of +- 25% for the day.