Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
US Overdosing on Debt - 19th Mar 19 -
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19
Tommy Robinson Looks Set to Become New UKIP Leader - 16th Mar 19
Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - 16th Mar 19
Towards the End of a Stocks Bull Market, Short term Timing Becomes Difficult - 16th Mar 19
UKIP Brexit Facebook Groups Reveling in the New Zealand Terror Attacks Blaming Muslim Victims - 16th Mar 19
Gold – US Dollar vs US Dollar Index - 16th Mar 19
Islamophobic Hate Preachers Tommy Robinson and Katie Hopkins have Killed UKIP and Brexit - 16th Mar 19
Countdown to The Precious Metals Gold and Silver Breakout Rally - 15th Mar 19
Shale Oil Splutters: Brent on Track for $70 Target $100 in 2020 - 15th Mar 19
Setting up a Business Just Got Easier - 15th Mar 19
Stock Market Elliott Wave Analysis Trend Forercast - Video - 15th Mar 19
Gold Warning - Here Are the Stunning Implications of Plunging Gold Price - Part 1 - 15th Mar 19
UK Weather SHOCK - Trees Dropping Branches onto Cars in Stormy Winds - Sheffield - 15th Mar 19
Best Time to Trade Forex - 15th Mar 19
Why the Green New Deal Will Send Uranium Price Through the Roof - 14th Mar 19
S&P 500's New Medium-Term High, but Will Stock Market Uptrend Continue? - 14th Mar 19
US Conservatism - 14th Mar 19
Gold in the Age of High-speed Electronic Trading - 14th Mar 19
Britain's Demographic Time Bomb Has Gone Off! - 14th Mar 19
Why Walmart Will Crush Amazon - 14th Mar 19
2019 Economic Predictions - 14th Mar 19
Tax Avoidance Bills Sent to Thousands of Workers - 14th Mar 19
The Exponential Stocks Bull Market Explained - Video - 13th Mar 19
TSP Recession Indicator - Criss-Cross, Flip-Flop and Remembering 1966 - 13th Mar 19
Stock Investors Beware The Signs Of Recession / Deflation - 13th Mar 19
Is the Stock Market Still in a Bear Market? - 13th Mar 19
Stock Market Trend Analysis 2019 - 13th Mar 19
Gold Up-to-Date' COT Report: A Maddening Déjà Vu - 12th Mar 19
Save Fintech? Ban Short Selling. It's Not That Simple - 12th Mar 19
Palladium Blowup Could Expose Scam of Gold & Silver Futures - 12th Mar 19
Next Recession: Concentrating Future Losses & Bringing Them Forward In Time As Profits - 12th Mar 19
The Shift of the Philippine Peso Regime - 12th Mar 19
Theresa May BrExit Back Stab Deal Counting Down to Resignation, Tory Leadership Election - 12th Mar 19

Market Oracle FREE Newsletter

Stock and Finanacial Markets Trading Analysis Worth

Five Investor Strategies to Control Market Greed

InvestorEducation / Learning to Invest Jan 13, 2011 - 08:12 AM GMT

By: Jared_Levy

InvestorEducation

Best Financial Markets Analysis ArticleMany of us (myself included) are drawn to the markets by the same force that can destroy our accounts: greed. While there are several ways in which greed can hurt us, there are five personal strategies that we can employ to control the market greed that is woven into our social fabric.


Personal Strategy 1: Be Aware That Greed and Fear Drive Price
Some may argue this über-simplistic view of the equity markets, but when you reduce that statement down to its purest form, it's true! When someone is willing to pay a higher price for a stock, that person, most likely on some level, is satisfying his or her greed instinct, in that they want to profit from their belief that the stock is moving higher. This works the same when fear sets in and you are driven to sell a stock at a lower price because of whatever fear you may have at that moment.

The problem with the word greed is that it carries a negative connotation and most of us don't like to admit our negatives.

Webster's Dictionary defines greed as "a selfish and excessive desire for more of something (as money) than is needed."

But what do we "need"? Is it bad to want to make a better life for yourself, pay your bills, and pay off your home or credit cards? Are we really being greedy? Maybe it should be that "need" and fear drive prices.

You see, for most of us who invest, we do so in order to make a better life for ourselves or our families, and enhance our way of life and retirement. The real problem is that these "wants" and "needs" in life, which are perfectly normal, sometimes end up getting in the way of our being a successful trader or investor.

Personal Strategy 2: Get to Know Yourself a Little Better
When I first started out as a trader, I had a lot to prove. I grew up from humble beginnings in Philadelphia, and I was always scared of being poor. I remember making my first trades thinking, "This could be the one that makes me a millionaire." I learned quickly that a thought process like that was a surefire way to miss my mortgage payment and even worse, lose my job as a trader.

The truth is, I was lucky enough to be taught at an early age from my mentor that the game is all about getting as many "hits" as you can and just staying on base as much as possible.

Translated into market talk, that means that you should strive to make as many good trades as you can (there will be losers), and once you are in a good trade, have a realistic profit target and either protect, scale out or simply exit the trade and walk with your profits, even if they are small. Staying on base means keeping your loss amounts minimal and moving on.

(Investing doesn't have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)

Personal Strategy 3: Listen to Your Gut
You would think that many retail investors fail because they don't have some secret knowledge or technology at their fingertips, but the truth is that the Internet offers you more resources now than when I started and I was able to prosper.

Having good technology and knowledge helps, but it's not the key to real success.

If you have been investing for over two years, you have probably got the basics down and can sense when stocks are being overbought or oversold. Follow those instincts and read the commentary from analysts and editors of reputable financial publications to confirm.

Usually the first clue is when your mother (who doesn't know finance) starts talking about the stock market. By the time it reaches someone who has minimal interest, the trend is probably coming to an end.

Personal Strategy 4: You Don't Have to Make That Trade
Yesterday, over 2 billion shares changed hands on the Nasdaq stock market alone; 9,500 of those trades were in blocks of 10,000 shares or more (generally there is some motivation if you are buying or selling 10,000 shares).

The point is that there is always opportunity long or short in the market -- don't force a trade because you feel like you "missed out." Trust me, there will be thousands more investment possibilities to come.

I remember from March-April 2009, the S&P 500 rose about 23% in a month's time. People couldn't believe it; they thought they missed it. Then after rallying some more, there was another 17.5% pop from July to August. At this point, many thought the rally was surely over, but then from its August 2009 highs until the end of the year, the S&P rallied another 13%... See what I mean!

Personal Strategy 5: Fix the Problem
The bottom line is that it's not technology, information, computers, account size, age or lack of intuition that is the biggest success culprit; it is our own greed and lack of action (or overaction) that gets us in trouble.

One exercise you can do to work on this is open up a virtual trading account at your brokerage firm (most offer them for free). In that account, I want you to make the investments you would make in your regular account, with the same typical investment size. But in this account, once you are in a profit of at least 5%, sell your position, and once you are in a loss of 4%, do the same. Also, once you get profitable in a trade, move your stop-loss just above where you would breakeven in the trade to prevent going back into the red.

Test this method out on paper and see if it helps or hurts you. It's OK to take losses; just don't let them overrun your winners. If you are 50/50 at picking your investments, this simple tip should help ensure you stay in the green.

Don't forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

Source : http://www.taipanpublishinggroup.com/tpg/smart-investing-daily/smart-investing-010711.html

By Jared Levy
http://www.taipanpublishinggroup.com/

Jared Levy is Co-Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange's youngest-ever members to become a market maker on three major U.S. exchanges.

He has been featured in several industry publications and won an Emmy for his daily video "Trader Cast." Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.

Copyright © 2011, Taipan Publishing Group


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules