Fear, greed and FOMO
You will also work out what one pip is worth on a standard lot, because every figure below depends on that number.
Recognise fear by what it does to your hands
Fear before a trade shows up as a finger on the close button. The planned stop sits 25 pips away, but the price moves 10 pips against you and the position feels unbearable. You close early. The loss is smaller than planned, so it looks like good management. It is not. You have taken a decision the plan did not authorise, and you have done it because the floating loss felt worse than the written rule.
Fear after a winner shows up as a finger on the close button again, for the opposite reason. The trade is 15 pips in profit, the target is 50 pips away, and you close to protect the gain. The market then reaches the target without you. On one standard lot, the difference between 15 pips and 50 pips is 35 pips. At KSh 1,240 per pip, that is KSh 43,400 you left on the table. The plan said 50. You took 15.
The physical feeling is tightness in the chest and a wish for the screen to stop moving. The thought is not 'I am breaking my rule'. The thought is 'I will re-enter when it calms down'. That re-entry usually happens at a worse price, or not at all. Fear does not announce itself as a rule break. It arrives as common sense, and that is why it works.
Notice greed while the position is still open
Greed does not begin with a bad entry. It begins with a good one that is working. The plan says take profit at 50 pips. The price reaches 50 pips, and you move the target to 80. The position is now outside the plan, and the stop is still where it was. If the price turns, you give back the 50 pips you had, plus the 25 pips at risk. On one standard lot that is 75 pips, or KSh 93,000, from a trade that was already a winner on paper.
The second form of greed is adding to a winner past your own limit. You had one standard lot. The trade is 30 pips up, so you buy another lot at the current price. Your average entry is now higher, and your total risk is larger than the plan allowed. A 25 pip fall from the new price loses money on both lots. The first lot may still be in profit, but the second is not, and the two together can turn a winning trade into a losing one.
Greed feels like confidence. The chart looks strong, the news agrees with you, and the extra lot seems obvious. Nothing in the body warns you. That is the difficulty: fear is uncomfortable, so you notice it. Greed is comfortable, so you do not. The only reliable check is the written plan. If the plan says one lot and a 50 pip target, then one lot and a 50 pip target are the whole trade.
Catch FOMO before the order is filled
FOMO starts with a move you did not take. EUR/USD runs from 1.0850 to 1.0875 while you are deciding. You feel that the move is happening without you, and you enter at 1.0875 with the same stop level you had planned for 1.0850. The stop distance is now 50 pips, not 25. The risk on one standard lot is KSh 62,000 instead of KSh 31,000. The extra KSh 31,000 buys you nothing. It is the price of entering late.
The target is also a problem. If your original target was 50 pips from 1.0850, that target is now only 25 pips from your chased entry at 1.0875. You are risking 50 pips to make 25. The reward-to-risk ratio has gone from 2 to 1 in your favour to 1 to 2 against you. The chart looks the same on the screen. The numbers are not the same, and the numbers are what you trade.
FOMO feels like urgency. The price is moving, the candle is long, and waiting feels like missing out. The thought is 'it will not come back'. Sometimes it does not. That is acceptable. A setup you did not take costs you nothing. A setup you chased costs you the difference between the planned risk and the chased risk, every time the stop is hit. Let the late one go and wait for the next setup.
One setup, two entries: a 4,340 KSh difference
| Step | Amount | Note |
|---|---|---|
| Planned entry | 1.0850 | The level marked before the session, where the setup was written down. |
| Chased entry | 1.0885 | The price after a 35 pip move, when the reader decides to join late. |
| Pip value on one standard lot | KSh 1,240 | 100,000 x 0.0001 = 10 units of the quote currency; converted at about KSh 124 per unit. This rate varies between brokers and by the day. |
| Planned stop distance | 30 pips | Placed below the setup level, as written in the plan. |
| Chased stop distance | 65 pips | The same stop level, now 65 pips away because the entry is 35 pips higher. |
| Planned risk on one standard lot | KSh 37,200 | 30 pips x KSh 1,240. |
| Chased risk on one standard lot | KSh 80,600 | 65 pips x KSh 1,240. |
| Extra money at risk | KSh 43,400 | KSh 80,600 minus KSh 37,200. |
| Planned target distance | 60 pips | Twice the stop, giving a 2 to 1 reward-to-risk plan. |
| Chased target distance | 25 pips | The same target level, now only 25 pips from the chased entry. |
| Planned reward if the target is reached | KSh 74,400 | 60 pips x KSh 1,240. |
| Chased reward if the target is reached | KSh 31,000 | 25 pips x KSh 1,240. |
| Difference in reward | KSh 43,400 | KSh 74,400 minus KSh 31,000. The chased trade risks KSh 43,400 more to earn KSh 43,400 less. |
The broker may round the pip value, add a spread, charge a commission, or quote a different conversion rate for the shilling. Those charges vary between brokers and are not included above.
Doing it once, step by step
Work through these steps once, in order, using the EUR/USD figures from this page. Each step produces one number or one written line that you can check against the lesson.
- 01
Write the pip value for one standard lot
One pip is 0.0001. A standard lot is 100,000 units. Multiply 100,000 by 0.0001 to get 10 units of the quote currency. Converting that to shillings depends on the rate at the time, and the rate varies.
- 02
Record the planned risk in shillings
The planned entry is 1.0850 with a 25 pip stop. At KSh 1,240 per pip, the planned risk is 25 multiplied by KSh 1,240. That equals KSh 31,000. Write this number down before you look at any chart.
- 03
Record the chased risk in shillings
The chased entry is 1.0875 with the same stop level. The stop distance is now 50 pips. At KSh 1,240 per pip, the chased risk is 50 multiplied by KSh 1,240. That equals KSh 62,000.
- 04
Subtract to find the cost of the chase
Take the chased risk and subtract the planned risk. KSh 62,000 minus KSh 31,000 equals KSh 31,000. That is the extra amount at risk on the same setup, on one standard lot, because the entry was late.
- 05
Name the state you were in
Look back at the last trade you broke a rule on. Was the entry late, the exit early, or the size too large. Write one sentence naming the state: fear, greed or FOMO. This is the only step that needs no arithmetic.
- 06
Set the rule before the next session
Write the entry, stop and target before the session starts. If the price has already passed the entry when you look, let that one go. Wait for the next setup. The broker may round the pip value, add a spread, charge a commission, or quote a different conversion rate. Those charges vary between brokers and are not included in the figures above.
The mistake most people make here
The common mistake is to treat a late entry as the same trade as the planned one, because the chart looks the same. It is not the same trade: the stop is wider, the target is nearer, and the money at risk is larger. Fear makes people close a planned trade too early, greed makes them add to a winner past their own limit, and FOMO makes them enter after the move. Instead, write the entry, stop and target before the session, and if the price has already passed the entry, let that one go and wait for the next setup.Check yourself
A planned entry is at 1.0850 with a 25 pip stop on one standard lot. The reader chases at 1.0875 and keeps the same stop level. How much extra is at risk, in KSh, if one pip is KSh 1,240?
The chased entry is 25 pips higher, so the stop distance grows from 25 pips to 50 pips. The chased risk is 50 x KSh 1,240 = KSh 62,000. The planned risk was 25 x KSh 1,240 = KSh 31,000. The extra at risk is KSh 62,000 minus KSh 31,000 = KSh 31,000.
On one standard lot of EUR/USD, what is one pip worth in units of the quote currency, and why?
One pip is 0.0001, and a standard lot is 100,000 units, so 100,000 x 0.0001 = 10 units of the quote currency. Converting to shillings depends on the rate at the time, which varies.
Questions that come up next
If fear makes me close early, is that not just protecting my money
Protecting money means following the risk you already agreed to. Closing at 10 pips against you when the plan said 25 is a different decision, made in the moment, and it breaks the rule. Sometimes it saves you, and sometimes the trade would have recovered. You cannot tell which in advance, so the plan is the only thing that keeps the result predictable.
How do I know whether I am being greedy or just confident
Compare what you are doing now with what you wrote before the session. If the target, the lot size and the stop are unchanged, it is confidence. If any of them moved while the position was open, it is greed, whatever it feels like. The feeling is not a reliable signal, so use the written plan as the test.
Is FOMO only about entering late
Entering after the move is the clearest form, because the entry price has already gone. It also appears as taking a setup you did not plan, or increasing size because the last few trades worked. In every case the decision is driven by what the market has just done rather than by your own written levels. The chart looks the same as a planned trade, but the stop and target are no longer yours.
Can I trade these three states out of my system with practice
They do not disappear, but they become easier to catch. The practical step is to write the entry, stop and target before the session, then check the open position against that page. If the price has passed your entry, let that setup go and wait for the next one. Doing this consistently matters more than any single trade.
What does one pip on EUR/USD actually pay me in shillings
On a standard lot, one pip is 10 units of the quote currency, because 100,000 multiplied by 0.0001 is 10. Converting that to shillings depends on the rate at the time, and the rate varies. Your broker may also round the pip value, add a spread, charge a commission, or use a different conversion rate. Those charges vary between brokers and are not included in the figures on this page.
Why does a chased entry cost more if the stop level is the same
The stop stays at the same price, but your entry moved up, so the distance between them grew. A planned entry at 1.0850 with a stop 25 pips below risks 25 pips. A chase at 1.0875 with the same stop risks 50 pips. At KSh 1,240 per pip, that is KSh 62,000 against KSh 31,000, so the extra at risk is KSh 31,000.
The words used on this page
- pip
- The smallest standard step in a currency price, written as 0.0001 for EUR/USD. On a standard lot it is worth 10 units of the quote currency before any conversion.
- standard lot
- A trade size of 100,000 units of the base currency. It is the size used in the examples here, so one pip moves the value by 10 units of the quote currency.
- stop
- The price at which you have decided to close a losing trade. It is written before the session, and moving it is a decision the plan did not authorise.
- target
- The price at which you plan to close a winning trade. Moving it further away while the position is open puts the trade outside the plan.
- FOMO
- The pull to enter because the price has already moved and you do not want to miss it. The entry is then above the planned level, so the stop distance and the money at risk both grow.
- floating loss
- A loss on a position that is still open, so it has not been taken yet. It can still change, which is why it feels worse than a written rule.
What to take away
- Fear closes a trade early, greed moves the target or adds size, and FOMO enters after the price has gone. All three break the plan, and only the written plan shows it.
- A planned entry at 1.0850 with a 25 pip stop risks KSh 31,000 on one standard lot. The same stop after a chase to 1.0875 risks KSh 62,000, so the extra at risk is KSh 31,000.
- Write the entry, stop and target before the session. If the price has already passed the entry, let that setup go and wait for the next one.
- The pip value and the shilling conversion vary between brokers, so check the figures your own account shows.