The Driving Force In The Stock Market : Greed and Fear
Greed and fear are the major players in the stock market. These two emotions are the driving force behind almost all market participants - Institutional mangers, stockbrokers, investors, traders and yourself.
You might be saying to yourself that greed and fear will never get in the way of my trading, but believe it or not they will be. It is not something to be ashamed of. It is something you have to admit to, come face to face with, if you are to become a successful stock trader or investor.
How do fear and greed look like in the stock market trading field?
You have been following a certain stock for a period of time now. It is advancing in price, so you decide to buy. You bought at a low price and now it is to higher price as you expected it would.
Now your greed pops up to the scene and convince you that this security is heading up like a rocket. So you are motivated to buy more of the stock, another possibility is that your stock is advancing higher and reaches beyond the selling price that you have planned to sell for. Now greed makes you believe that the stock will continue in an uptrend till the next day and so you hold on to it.
When stocks move higher to the upside, greed causes the market participants to join in hoping for big profits.
Securities prices in most situations plummet quicker than go up and when this happen fear steps up.
Let us consider the example above, where you security advanced higher than the price you planned to sell for and you held on because greed controlled your emotions. The next morning the security price was lower than the previous day. Greed is convincing you that the stock price would rebound though it is now being dumped by traders. you continue to hold one while the price is in down spiral. Now fear is by your side, your profit has turned into a loss.
Everyone goes through this until they have mastered the ugly faces of greed and fear. Master this and you are well on your way to becoming a successful stock trader. - 23210
You might be saying to yourself that greed and fear will never get in the way of my trading, but believe it or not they will be. It is not something to be ashamed of. It is something you have to admit to, come face to face with, if you are to become a successful stock trader or investor.
How do fear and greed look like in the stock market trading field?
You have been following a certain stock for a period of time now. It is advancing in price, so you decide to buy. You bought at a low price and now it is to higher price as you expected it would.
Now your greed pops up to the scene and convince you that this security is heading up like a rocket. So you are motivated to buy more of the stock, another possibility is that your stock is advancing higher and reaches beyond the selling price that you have planned to sell for. Now greed makes you believe that the stock will continue in an uptrend till the next day and so you hold on to it.
When stocks move higher to the upside, greed causes the market participants to join in hoping for big profits.
Securities prices in most situations plummet quicker than go up and when this happen fear steps up.
Let us consider the example above, where you security advanced higher than the price you planned to sell for and you held on because greed controlled your emotions. The next morning the security price was lower than the previous day. Greed is convincing you that the stock price would rebound though it is now being dumped by traders. you continue to hold one while the price is in down spiral. Now fear is by your side, your profit has turned into a loss.
Everyone goes through this until they have mastered the ugly faces of greed and fear. Master this and you are well on your way to becoming a successful stock trader. - 23210
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posted by X - Men @ 6:30 AM
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