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.
What do greed and fear look like in the stock market trading arena?
You have been noticing a particular stock for some time now. The stock seems to be doing well, so you made a decision to buy. You bought it at a reasonable price and now it is trending higher just as you anticipated 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 analyze the example above, where your stock moved beyond your exit price and you held on because you were on the side of greed. The next morning the stock price went down. The stock is being under heavy selling pressure, but you would not sell because greed is convincing you that higher prices would come back. While you are holding on, the price keep going down and now fear is popping up, but it is too late, now you have looses not profits.
Every trader will suffer through this until they have control over these two emotions of fear and greed. Once you have controlled these two emotions, you are on your way to succeed in trading. - 23162
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.
What do greed and fear look like in the stock market trading arena?
You have been noticing a particular stock for some time now. The stock seems to be doing well, so you made a decision to buy. You bought it at a reasonable price and now it is trending higher just as you anticipated 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 analyze the example above, where your stock moved beyond your exit price and you held on because you were on the side of greed. The next morning the stock price went down. The stock is being under heavy selling pressure, but you would not sell because greed is convincing you that higher prices would come back. While you are holding on, the price keep going down and now fear is popping up, but it is too late, now you have looses not profits.
Every trader will suffer through this until they have control over these two emotions of fear and greed. Once you have controlled these two emotions, you are on your way to succeed in trading. - 23162
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 @ 8:42 AM
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