Fear, greed and FOMO
What you learn in 3 minutesThis lesson is about the three states that make people break their own rules: fear, greed and FOMO. Each one has a price, and the price is paid in naira. We will compare the same EUR/USD setup taken two ways: once by plan, once in a chase. The difference is not luck. It is arithmetic.
The same setup, taken two ways: ₦29,000 apart
| Step | Amount | Note |
|---|---|---|
| Planned entry | 1.0850 | The level written in the plan before the session started. |
| Chased entry | 1.0879 | The price after the move already happened, when FOMO took over. |
| Stop distance, planned | 20 pips | From 1.0850 down to 1.0830. The risk was decided in advance. |
| Stop distance, chased | 49 pips | From 1.0879 down to 1.0830. The same stop, a much longer walk to it. |
| Size on one standard lot | ₦14,500 per 20 pips | One pip on one standard lot is 10 units of the quote currency. At an example rate of ₦1,450 per unit, 20 pips is 200 units, which is ₦290,000. On 0.10 lots that is ₦29,000; on 0.05 lots it is ₦14,500. |
| Cost of the chase, 0.05 lots | ₦35,525 | 49 pips x 5 units per pip x ₦1,450 = ₦35,525. The planned trade risked ₦14,500. |
| Extra risk created by FOMO | ₦21,025 | ₦35,525 minus ₦14,500. Nothing about the setup changed. Only the entry did. |
The broker may round the pip value, charge a spread on entry, and quote a different conversion rate for NGN. These figures vary between brokers and change with the rate.
The mistake people make here
The mistake is treating a missed move as a lost opportunity, then entering late to make up for it. That late entry stretches the distance to the stop, so the same setup risks two or three times more money for the same target. Fear does the opposite: it closes a planned trade early, before the stop or target is reached, and turns a small planned loss into an unplanned one. Greed adds size after a win, so the next loss is larger than any win before it. The fix is to write the entry, stop and size before the session, and to treat any entry away from that level as no trade at all. If the price has moved, the trade is gone. Wait for the next one.Check yourself
You plan to risk 20 pips on 0.10 lots of EUR/USD. One pip on one standard lot is 10 units of the quote currency, and the example rate is ₦1,450 per unit. What is the planned risk in naira?
20 pips x 10 units per pip x 0.10 lots x ₦1,450 = ₦29,000.
You chase the same setup and your stop is now 49 pips away on 0.10 lots. What is the risk in naira, and how much more is that than the plan?
49 pips x 10 units per pip x 0.10 lots x ₦1,450 = ₦71,050. That is ₦71,050 minus ₦29,000 = ₦42,050 more than the plan.
Your account is ₦290,000. The planned risk of ₦29,000 is what percentage of the account, and why does that matter before you enter?
₦29,000 divided by ₦290,000 = 10 per cent. Knowing this before entry tells you whether the trade fits your own limit. If your limit is lower, you reduce the lot size or skip the trade.