Quotation:
Collective fear stimulates herd instinct,
and tends to produce ferocity toward those who are not regarded as members of
the herd...Bertrand Russell
The four major fears of traders and investors: fear of
losing, fear of missing out, fear of leaving money on the table and fear of
being wrong--are really some combination of fear and greed. The bottom line
here is that fear is the predator…..Janice Dorn, M.D., Ph.D.
The quotes above are extracted from the author’s article
about emotions in trading stocks. To simplify so that general folks can
understand better, I have filled in a chart of SEAGATE (the hard-disk drives manufacturer)
the 4 fears. Take a look at the chart below.
1.
Fear of missing out the action: whereby most
folks who do not read
chart or though able to read chart but very confused by the numerous indicators will
tend to buy high.For me, I am using T3B system and the indicator K line (black line at the bottom over the volume
bars) shows high and sell signals are appearing. No way it is buying long! Many
novices in “investing” stocks tend to buy following stories of friends who are
making money from this stock. A friend could have bought at 19~20 and held until
30. Stories tell that SEAGATE may rise over 35!
2.
Fear to admit loss: when price keep dropping
from 30 until 25, there is always hope that the stock may rise back. He will say, “if it touches
near 30 again, I will sell”. However, most folks will start to panic and sell
at 22.
3.
Fear of being wrong again: after a period of
downtrend, many dare not jump in yet for fear the price would drop further. It
is the fear over being wrongly entered again. For me, my T3B chart tells me it is low K line and buy signals
appear. It is time to start buying and also following money management rules to
go in.
4.
Fear of profits goes away: this is so true of
many beginner traders learning chart reading skills. The slight pull back
triggers him to sell off quickly at 28 while I will hold until 33 when K line again is high with
sell signals.
Or if you are a Malaysian,
contact this office for free lessons:-
T3B Malaysia Sdn Bhd
Tel: 603-77281078
Or e-mail: previewmy@t3bsystem.com
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