Master This To Become A successful Trader: Greed And Fear PDF Print E-mail
Written by Leyla Maker   
Tuesday, 12 January 2010 17:45
The major players in the stock market emotions are greed and fear. They are the forces that drives all market participants - Stockbrokers, institutional managers, traders, investors and yourself.
by LeylaMaker


The major players in the stock market emotions are greed and fear. They are the forces that drives all market participants - Stockbrokers, institutional managers, traders, investors and yourself.

Perhaps you believe that you will not let fear and greed would never be in your way of trading, but I can assure you that they will be. It is not something that should cause shame. It is something you have to face it, recognize it and deal with it, if you plan to be a successful 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 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 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.

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.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

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.