[/caption]The primary reason for people wanting to trade stock is to buy low sell high. So, they can earn the price difference. Market is driven by greed and fear. Many people made wrong decision because of emotional factor, which causes them to sell low and buy high.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it. Read more...[caption id="attachment_1358" align="alignright" width="150" caption="Photo by Francisco Belard "][/caption]The primary reason for people wanting to trade stock is to buy low sell high. So, they can earn the price difference. Market is driven by greed and fear. Many people made wrong decision because of emotional factor, which causes them to sell low and buy high.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it. Read more...
[/caption]The primary reason for people wanting to trade stock is to buy low sell high. So, they can earn the price difference. Market is driven by greed and fear. Many people made wrong decision because of emotional factor, which causes them to sell low and buy high.
Buying stock is different from buying things from supermarket. In supermarket, everyone has a benchmark on the value of goods, you will buy if the item is on sale, the price is now lower. Stock price is different, when the price is low, people are afraid it will fall further. This is because of the fear factor. On the other hand, if your favourite stock is going up each day, sooner or later you will get sucked into the rally and buy it too high.
How do we avoid that? We need to have a mental framework of establishing the value of stock. Once you have a benchmark on what price this stock is worth. When it is selling below the benchmark, you can take time to accumulate. When it is selling way above the benchmark, you can take time to unload it. Read more...
