J5JUR6XCDS5Q Trading stocks is an art that takes time and great effort to learn and perfect. And, the most common concept and psychology of trading stocks is that the decisions of investors are governed by two forces: fear and greed. It is of essence to note that whether an investor is bullish or bearish on a stock, he or she will certainly find himself or herself somewhere between these zones.
Fear in trading stocks comes in when you are not certain of the returns of your investment. Whether you are buying or selling, fear will make you ask yourself several questions. I’ve I bought the price at the correct price? Is the stock price still increasing? Should I quit the positing now?
The best way to overcome fear when trading stocks is to carry out a thorough analysis before pulling the trigger. Instead of placing orders here and there without doing enough groundwork, you should investigate the company conclusively and perhaps read trusted market commentaries. After you are certain of the path you want to take concerning the stock, you will gain confidence because the decision will be based on a response to information and not on your emotional thoughts.
In addition, before placing an order, you should calculate your profit targets to eliminate fear from the equation. What is the reasonable amount of profit I expect to get from this trade? And, after you have set your profit goals, you should stay in the trade regardless of the circumstances.
The other psychological concept in trading stocks is greed. Greed and fear are twin brothers because they work in the same manner. Greed will make you always want to sell at the highest price; however, waiting too long for that perfect high will usually make you lose opportunities of harvesting some good returns. On the flipside, greed will prevent you from entering a buy trade because you are still waiting for that perfect low.
The remedy for greed is the same as that of fear: believe in yourself. When you want to enter a trade, set your goals and stick to them, instead of being whipsawed by your emotions. Greed and fear operate under one common element: impatience. These extreme concepts in stock trading make investors to look for quick profits, without carrying out the due diligence required for success in this business. Therefore, if you want to realize good profits in stock trading, you should learn how to overcome these two destructive emotions.