Stock Market: The Land of 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 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 securities move in an uptrend, greed from all who participate in the market adds to the uptrend.
Stock prices usually fall faster then they go up, and when this happens, fear now steps up to the plate.
Let us look at the example above, where your stock went through your get out price and you held on because greed was by your side. The next morning the stock price gaps down. There is heavy selling all morning long. Greed is telling you to hang in there the price will come back. The price keeps going down, now you get a knot in your gut, and your knuckles are turning white. Fear is now by your side, but by now it is too late, your nice profit has turned into a loss.
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.
Article Source: FxTradingStock.com
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Looking to find the best information on stock trading over the internet, then visit www.stocktradinginternet.net to find the best advice on how to trade stocks online for you.
by: Leyla Maker
Total views: 58
Word Count: 402
Date: Tue, 12 Jan 2010
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