Fear and Greed And Learning About Stock Trading
May 22, 2010
There are many stock traders making a very good living out of the financial markets. Then there are also thousands of unsuccessful traders who don't realize they have to educate themselves before venturing into trading.
The most important reason for failure as a trader is not the market. It's yourself. Once you realize that you are not really trading "against the market" but against your own weaknesses, you are on your way to become a successful trader. If you are afraid of risks, for example, or you hate to lose money, you will always tend to exit a winning trade long before it has reached it's full potential. And you will also tend to stay with a losing trade long after you should have let it go, because you hope it will turn around and you can't stand the idea of losing money.
To trade successfully you must learn to allow profitable trades to fully develop their potential. That needs a lot of self discipline. And you also have to learn to let go of a losing trade before it's too late.
There are certain techniques to learn how to do this. To prevent yourself from clinging to a losing trade, never go into a trade without a stop loss already set up. This means that if the trade goes against you, you will get out at the stop loss level no matter what. Similarly, enter every trade with a take profit level, which means you will stay in the trade until it has reached either the take profit level or the stop loss level.
There are some good services out there you should use to learn more about investing. You should Try reading Bernie Mitchell's Fibonacci Market Newsletter, it has been published since the fall 1999. He follows stock index futures and gold using technical analysis.
The next important step you have to take is to educate yourself. Learn how the various technical and fundamental indicators work. Study how they are influenced by different types of markets. Then get yourself decent trading software with the ability to chart all the different indicators.
Mike Swanson ~ WallStreetWindow
© 2010 B. Mitchell PBSP LLC - ALL RIGHTS RESERVED. This commentary is published for private investors and friends of PBSP. Transmitting this information electronically or graphically by unauthorized third parties is strictly prohibited.
Stock Trading, Futures Trading, and Shorting Involves Risk and is Not Suitable for Everyone.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY FUTURES, INDEXES AND/OR SECURITIES MENTIONED. INVESTING IN FUTURES, INDEXES AND/OR SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS COMMENTARY IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF BERNARD MITCHELL. THIS MATERIAL IS PREPARED FOR GENERAL CIRCULATION AND MAY NOT HAVE REGARD TO THE PARTICULAR CIRCUMSTANCES OR NEEDS OF ANY SPECIFIC PERSON WHO READS IT. THE INFORMATION CONTAINED IN THIS REPORT HAS BEEN COMPILED FROM SOURCES BELIEVED TO BE RELIABLE, BUT NO REPRESENTATIONS OR WARRANTY, EXPRESSED OR IMPLIED, IS MADE BY BERNARD MITCHELL, PBSP LLC, OR ANY OTHER PERSON AS TO ITS ACCURACY, COMPLETENESS OR CORRECTNESS. ALL OPINIONS AND ESTIMATES CONTAINED IN THIS REPORT REFLECT THE WRITER'S JUDGEMENT AS OF THE DATE OF THIS REPORT, ARE SUBJECT TO CHANGE WITHOUT NOTICE AND ARE PROVIDED IN GOOD FAITH BUT WITHOUT LEGAL RESPONSIBILITY. TO THE FULL EXTENT PERMITTED BY LAW NEITHER BERNARD MITCHELL, PBSP LLC, OR ANY OTHER PERSON, ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY DIRECT, INDIRECT OR CONSEQUENTIAL LOSS ARISING FROM ANY USE OF THIS REPORT OR THE INFORMATION CONTAINED HEREIN.