The Driving Force In The Stock Market : Greed and Fear
The stock market emotions are being played by two major players: Greed and fear. They are the forces driving all market participants - Institutional managers, stock brokers, 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 greed and fear look in the stock market trading stage?
You have been watching a particular stock for some time now. It has set up perfectly, so you pull the trigger. You bought it at the perfect price and now it is moving higher just as you thought it would.
Now your greed interferes and you believe that this stock price is shooting high. So you decide to buy more. another scenario is that your stock advances a few points beyond your exit price that you have planned for. Greed convinces you that that stock will continue to move in an uptrend tomorrow, so you hold on.
When stocks make strong moves to the upside greed from all the cumulative market participants joins the move.
Stock prices usually fall faster then they go up, and when this happens, fear now steps up to the plate.
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. - 23159
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 greed and fear look in the stock market trading stage?
You have been watching a particular stock for some time now. It has set up perfectly, so you pull the trigger. You bought it at the perfect price and now it is moving higher just as you thought it would.
Now your greed interferes and you believe that this stock price is shooting high. So you decide to buy more. another scenario is that your stock advances a few points beyond your exit price that you have planned for. Greed convinces you that that stock will continue to move in an uptrend tomorrow, so you hold on.
When stocks make strong moves to the upside greed from all the cumulative market participants joins the move.
Stock prices usually fall faster then they go up, and when this happens, fear now steps up to the plate.
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. - 23159
About the Author:
Learn more about stock trading on the internet. Stop by Leyla Maker's site where you can find out all about how to trade stocks onlineand how it can help you.
posted by X - Men @ 6:43 AM
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