Fear, greed and FOMO
The internal shape of fear and greed
Fear begins as a physical signal. The chest tightens, the breath shortens, and the hand moves towards the mouse before the mind has decided anything. On a chart of AUD/USD near 0.6640, fear often appears after a position has moved against the plan. The written rule might say the stop stays at 20 pips, which on one standard lot is about A$132.80. Fear suggests that moving the stop further away will give the price room to recover. That suggestion is the rule breaking itself.
Greed arrives with a different feeling. It feels like clarity. A position is in profit, and the mind produces a reason why the profit should be larger. The written rule might say take half the position off at 30 pips, which on one standard lot is about A$199.20. Greed says the move has further to run. The position is left open, the stop is not moved to break even, and the trade that was working becomes a trade that is now exposed to the same risk as before, with no new information to justify it.
Both states share one feature: they feel like information about the market. They are not. They are information about the person holding the position. The market does not know where the stop is, and it does not know what the plan said. The only thing that changes when fear or greed takes over is the distance between the written rule and the next click. That distance is the whole subject of this lesson.
How FOMO is read on the platform
FOMO is not a chart pattern. It is a sequence of clicks that leaves a trace. The trace is the entry price compared with the level that was written before the session. If the written entry was 0.6640 and the filled entry is 0.6655, the platform shows a difference of 15 pips. On one standard lot, with a pip value of about A$6.64, that difference is about A$99.60. The platform does not label it as FOMO. It labels it as a fill.
The same sequence can be read in the stop distance. A planned stop might have been 20 pips from 0.6640, which is 0.6620. After a chased entry at 0.6655, the same stop level is now 35 pips away. The risk per lot has changed from about A$132.80 to about A$232.40. If the position size is left unchanged, the trade is no longer the trade that was planned. If the position size is reduced to keep the same risk, the stop is now closer in pip terms and more likely to be hit by ordinary movement.
The platform also records the time of the order. A planned entry is often placed at a level and left to wait. A chased entry is placed after the price has already moved, so the time stamp sits after the move rather than before it. That time stamp is the clearest evidence that the rule was broken. It does not require any judgement about whether the trade was good or bad. It only shows that the entry was not the one that was written down.
What a written rule looks like in A$ terms
A rule that says do not chase is not a rule. It cannot be checked. A rule that says the entry is 0.6640, the stop is 0.6620, and the maximum loss is A$132.80 on one standard lot can be checked. The A$ figure is the part that makes it real. On 0.20 lots, the same 20-pip stop is about A$26.56, because the pip value is about A$1.33 per pip. The rule must state the lot size as well as the levels, or the A$ figure is not fixed.
The written rule should also state what happens if the entry is missed. One option is that the setup is gone for the session. Another is that a new entry level is written only after the price has stopped moving and a new plan is made. Both are valid. What is not valid is taking the old plan and applying it to a new entry. The old plan was built for 0.6640. At 0.6655, the distance to the stop is different, the distance to the target is different, and the risk in A$ is different.
Brokers vary in how they round the pip value, in the spread they quote, and in any commission or swap charged on top. The figures here are illustrations of the arithmetic, not quotes from any broker. The purpose of writing the rule in A$ is not to predict the cost. It is to make the cost visible before the click, so that the decision to break the rule is made with the number in front of the eyes rather than after the fact.
The same setup taken twice, with a 20-pip difference
| Step | Amount | Note |
|---|---|---|
| Planned entry | 0.6640 | the level written in the plan before the session started |
| Chased entry | 0.6660 | the price after the move, taken in a hurry |
| Distance between the two entries | 20 pips | 0.6660 minus 0.6640, expressed in pips |
| Value of one pip on one standard lot | about A$6.64 | 10 units of the quote currency at a rate near 0.6640 |
| Extra cost of the chased entry on one standard lot | about A$132.80 | 20 pips multiplied by about A$6.64 per pip |
Brokers vary in how they round the pip value, in the spread they quote, and in any commission or swap charged on top. The figure above is an illustration of the arithmetic, not a quote from any broker.
Doing it once, step by step
The following steps set up a written plan before a session and then check it after the session, using AUD/USD near 0.6640 and one standard lot as the example. Each step produces a number or a line of text that can be compared with what actually happened.
- 01
Write the entry, stop and target
Before the session, write three levels on paper or in a note: the entry, the stop and the target. For example, entry 0.6640, stop 0.6620, target 0.6700. These are the only levels that the session will use. If the price does not reach the entry, the setup is gone.
- 02
Convert the stop distance into A$
Subtract the stop from the entry to get the stop distance in pips. In the example, 0.6640 minus 0.6620 is 20 pips. Multiply by the pip value for the lot size. On one standard lot, 20 pips multiplied by about A$6.64 is about A$132.80. Write that A$ figure next to the levels.
- 03
State the missed-entry rule
Write one sentence that says what happens if the price moves past the entry before an order is filled. For example: if the price trades above 0.6640 before entry, the setup is cancelled for the session. This sentence removes the decision from the moment of the click.
- 04
Record the actual fill and time
After the session, write down the actual entry price and the time of the fill. Compare the actual entry with the written entry. If the actual entry is 0.6655 and the written entry was 0.6640, the difference is 15 pips. On one standard lot, 15 pips multiplied by about A$6.64 is about A$99.60.
- 05
Compare the risk taken with the risk written
Using the actual entry and the original stop, recalculate the risk in A$. At 0.6655 with a stop at 0.6620, the distance is 35 pips. On one standard lot, 35 pips multiplied by about A$6.64 is about A$232.40. Compare that with the written maximum loss of about A$132.80. The difference is the cost of the broken rule.
- 06
Adjust the next session's rule
If the comparison shows a difference, change one line of the written rule for the next session. For example, add a sentence that the order must be placed before the level is reached, or reduce the lot size so that the A$ risk stays fixed. Do not change more than one line at a time, so that the effect of the change can be seen.
The mistake most people make here
The common mistake is to treat the chased entry as the same trade as the planned one, because the setup looks identical on the chart. It is not the same trade: the entry, the stop distance and the position size all change, and the extra A$132.80 in the example is money that the plan never agreed to risk. Instead, write the entry level, the stop level and the maximum loss in A$ before the session, and if price has already moved past the entry, treat the setup as gone. A setup that has been missed costs nothing; a setup that has been chased costs the difference in pips multiplied by the pip value.Check yourself
AUD/USD is near 0.6640 and one standard lot pays about A$6.64 per pip. A planned entry at 0.6640 is missed and the entry is taken at 0.6655 instead. What is the extra cost on one standard lot?
The difference is 0.6655 minus 0.6640, which is 15 pips. 15 pips multiplied by about A$6.64 per pip is about A$99.60 on one standard lot.
The same 15-pip chase is taken on 0.20 lots instead of one standard lot. What is the extra cost?
0.20 lots is one fifth of a standard lot, so the pip value is about A$1.33 per pip. 15 pips multiplied by about A$1.33 is about A$19.95.
Questions that come up next
What does a stop level actually mean on the platform
A stop level is the price written before the session at which the position is closed to cap the loss. On AUD/USD near 0.6640, a stop 20 pips away sits at 0.6620. On one standard lot that distance is about A$132.80. The platform holds the level, but the person holding the position is the one who decides whether it stays there. Moving it is a new decision, not a market event.
Why does a chased entry change the stop distance
The stop level was chosen for the planned entry, not for the filled one. If the entry moves from 0.6640 to 0.6655, a stop at 0.6620 is now 35 pips away instead of 20. On one standard lot the risk per lot rises from about A$132.80 to about A$232.40. The chart looks the same, but the distance from entry to stop is not.
What does reducing position size after a chase do
Reducing the size brings the money risk back towards the planned figure. If the stop is now 35 pips away and the intended risk was about A$132.80, the size must fall to roughly 0.57 of a standard lot. That keeps the loss similar in dollars. The cost is that the stop is closer in pip terms, so ordinary movement can reach it sooner. The trade is not the same trade.
How does fear show up in the order history
Fear often leaves a stop that has been moved further from the entry, or a position closed before the written exit. The order history shows the new stop level and the time it was changed. If the written rule said 20 pips and the record shows 35, the difference is visible. The platform does not name the emotion, but the numbers show the distance from the plan.
How does greed show up in the order history
Greed often leaves a target that was passed and a position still open. The written rule might say take half off at 30 pips, about A$199.20 on one standard lot. If the record shows no partial close at that level, the rule was not followed. The stop may also still sit at its original distance, so the open profit is exposed to the same risk as before.
What can be written before a session to make these states visible
Write the entry level, the stop level, the maximum loss in A$, and the exit rule for part of the position. Keep the note beside the platform so the numbers can be compared with the fill. After the session, compare the written entry with the filled entry and the written stop with the stop on the record. The gaps between them are the lesson, and they cost nothing to measure.
The words used on this page
- pip
- A pip is the smallest standard step in a currency pair's price. On AUD/USD near 0.6640, one pip is 0.0001. Pip value depends on the lot size, so one standard lot pays about A$6.64 per pip at that rate.
- stop level
- The stop level is the price at which a position is closed to limit the loss. It is chosen before the trade, not during it. On AUD/USD near 0.6640, a stop 20 pips below the entry sits at 0.6620.
- position size
- Position size is how much of the instrument is held, measured in lots. One standard lot on AUD/USD pays about A$6.64 per pip at a rate near 0.6640. A smaller size pays less per pip, so the same stop distance costs less.
- fill
- A fill is the price at which an order is actually executed. It can differ from the level written in the plan. If the plan said 0.6640 and the fill is 0.6655, the difference is 15 pips.
- maximum loss
- The maximum loss is the largest amount in A$ that the plan allows a single trade to lose. It is set before the session. On one standard lot, a 20-pip stop on AUD/USD near 0.6640 is about A$132.80.
- break even
- Break even means moving the stop to the entry price so the trade can no longer lose money. It is a written rule, not a feeling. If greed leaves the stop where it was, the open profit stays exposed to the original risk.
What to take away
- Fear, greed and FOMO are states of the person holding the position, not information about the market.
- A chased entry changes the entry, the stop distance and the position size, so it is a different trade from the planned one.
- The gap between the written rule and the fill is measurable in pips and in A$, and it costs nothing to check after the session.
- Brokers vary in rounding, spread and any commission or swap, so the figures here illustrate the arithmetic rather than quote any broker.