Human psychology stock market
The psychology behind trading stocks is the force that moves the stock market.
A stock chart is nothing more than a picture of human emotions. Painted on the canvas are the emotions of greed, fear, hope, and euphoria. As a disciplined trader, you capitalize on the psychological demons that plague other traders. These are some of the questions that destroy trading accounts because the novice traders asking these questions do not have a plan.
If you asked a professional trader one of these questions he or she would say, "I don't know. What does your plan tell you to do. So what ends up happening?
They get excited and buy at the worst possible time. Then the stock reverses.
Fear creeps in and then the stock goes lower Finally the pain becomes too much to bear so they sell taking a huge loss.
You cannot take big losses and expect to be a profitable swing trader and if you cannot take a small loss, then you will take the mother of all losses! Now let's look at the psychology behind what happens when a stock does go in the desired direction:. Yeah, I'm making money! By now I'm sure that you have heard the saying, "Keep you losses small and let your winners run".
Look at what just happened in the above example. The un-disciplined trader has just done the opposite! They have let their losses get big and they have limited their winners! All of this mental anguish can be eliminated by having a decent trading strategy and the mental discipline to stick with it.
Write down a plan for the trade before you trade the stock. Then trade it according to the plan that YOU have written. Human psychology stock market that you have devised a plan before you got into the trade when your emotions were stable.
Emotion, Not Rational Logic, Determines the Stock Market | Psychology Today
Now you can trade your plan with confidence. For most novice traders, it is not their strategy that is causing them to lose money. It is themselves that is their biggest enemy.
Stock Exchange: Can Psychology Be Applied To Market Behavior? - Discover Financial Services (NYSE:DFS) | Seeking Alpha
Learning to trade stocks and applying technical analysis to charts is mostly about human psychology - not chart patterns and candlestick patterns themselves. You have to understand the psychology behind these patterns. Take a look at the following chart:. Breakout Traders - These traders bought the breakout. They operate under the "greater fool theory". They are just praying that other traders come along and buy higher than they did. Novice Traders - These traders just have no idea what they are doing.
There are buying shares of stock that the breakout insider trading stock picks are now selling to them. Momentum Traders - These traders are buying the pullback and tend to buy near the 10 MA. They are likely going to put their stop below the low of the hammer.
Human Psychology Determines Success or Failures in Stock Investing | qyzofolawory.web.fc2.com
Swing Traders - This is where we come in. The stock falls below that hammer and the momentum traders get stopped out. By now most of the novice traders and momentum traders have sold.
Human Psychology and Collective Behavior in the Stock Market
See how the volume has tapered off? Previous resistance now becomes support. Novice Traders - Once again, the novice traders are buying at the worst possible time.
We need these traders so that we can sell our shares to them and make a profit. Remember this is all just speculation. We obviously aren't mind readers - but we can understand how other traders think.
How do I know all this?
Because I used to be a breakout trader As swing traders, all we really have to know is the psychology behind the moves in the stock market. We have to learn how to control our own emotions first and then we have to learn how to profit off of those that have not learned how to control them! This is one of the best swing trading courses available. Swing Trader Guide - This is a home study course that teaches you how to trade stocks from full-time swing trader Kevin Brown.
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The Psychology Behind Technical Analysis. Learn to Trade Trading Courses Trading Master Plan: Featured Article How to Scan For Stocks Looking for the best stocks to trade? See my list of the top technical analysis books that I think every trader should own.
