Monday, July 21, 2008
market emotions
Can the success ratio be 100% in predicting the formation of a trend in a market ? According to the professional traders , the success ratio can be increased maximum 80% but trading companies cannot be 100% sure of their success . so what is the ultimate reason for their huge profits ? The only reason behind their win win situation are their average profits always greater than their average lossess. If they get stuck up in some deal they'll admit their mistake quickly and book the loss and on the order hand a retail investor always wait for some miracle to happen which drains away all the profits earn in the previous deals. So the ultimatum is markets are never wrong and it,ll punish the investor until he admits his mistake. The two emotional factors that rules the person in a market are greed and fear . If a person is able to form a stratergy in a market in which both these emotions are hidden factors then success ratio always increases .
Subscribe to:
Post Comments (Atom)
6 comments:
Can U be more specific....about the role of "fear and greed" in market. Though it is well known ...but can u come up with some real life example to elobatrate
Basically i meant the impact of greed and fear rules in the market.So if u are under the influence of any of the mentioned emotions then its very difficult to earn from market anyways.
As an example when playing casino when we win ,we invest whatever we earned out of GREED and when we lose we invest more in order to recover out of FEAR.So the birth of these two emotions arises out speculation as casino is a game of speculation and i have already pointed out in long run speculation yields no returns.
And my suggestion in the last para was try to hide these emotions by forming a stratergy which means NO SPECULATION
So ... your gurumantra is NEVER SPECULATE . Right? then do what?
Trade ? or Invest ?
U say..." So if u are under the influence of any of the mentioned emotions then its very difficult to earn from market anyways."
Do you mean to say that , only those operator .. who deosn't have greed or fear succed?
I meant greed and fear are attached wholly to speculation but if you are forming a stratergy either by fundamental or on technical basis then you can earn better from market as market gives us lots of oppurtunities.And it just the matter of isdentifying these oppurtunities and hitting them hard.AND even if you form stratergies your probability of winning will increase 85% but not 100% as its correctly said MAREKT ARE HIGHLY UNPREDICTABLE
well nimish to some extent you are right but not completely coz its not just the greed and fear that raises the oppurtunity cost but involved is the risk factor which a marketeer realises before investing and and prepares for himself the avenue to handle the -ve side (i.e.losses) and therefore plans accordingly to adjust the losses ....... eg . Big bazaar sells ample of comodities but excels in foods bazaar so wat do they do to cover the cost of others , launches combo deals that includes items from food and clothes or other electrics to attract ppl '(My Opinion : a Layman's language to your blog )
According to me, your quiery about the risk and fear factor are already clearified in my above mentioned articles and comments.
Post a Comment