Stock Market changes in price everyday as a result of two market forces. We call these two forces as Supply and Demand. Demand occurs when buyers overcome the sellers causing the price to move up. The opposite of this one, is the Supply. It happens when sellers overcomes the buyers causing the price to move down.
Together with these two market forces comes two worse emotions: FEAR and GREED.
Most often people get caught up with GREED as a result of the desire to accumulate as much wealth as possible in the shortest time possible.Just as the market can become overwhelmed with greed, the same can happen with FEAR. When stocks suffer large losses for a sustained period, the overall market can become more fearful of sustaining further losses. But being too fearful can be just as costly as being too greedy.
The fastest way to lose your account is being Greedy and Fearful. They buy when the market is near its top and is about to make some major corrections. While they sell when the market is about to bottom and is about to make a major rally.
The fastest way to lose your account is being Greedy and Fearful. They buy when the market is near its top and is about to make some major corrections. While they sell when the market is about to bottom and is about to make a major rally.
To avoid
such emotions, one must follow a trading or investment plan that is well thought
out and tested on any market conditions. One such plan is for investors is to
use the peso cost averaging, SAM
strategy, or the SCA method as teach from my elite trading group. For Traders, one
must learn how to properly time the market using charts to avoid buying at the
top and selling at the bottom.
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