Home
Up
New Page 20

Co-brand Partnerships

award-5.gif (6517 bytes)
Vote for Us

topsite.gif (1668 bytes)

webfifty.gif (6027 bytes)

drop_center.gif (2753 bytes)



The #1 Electronic Broker for Active Online Traders

wpe1.jpg (2095 bytes)


WEB DIRECTORY
WEB SEARCH
 CITY GUIDES



City
State
Zip
 WEATHER

Current Weather
Enter Your City, State, or Zipcode:

   

MASTERING
THE TRADE

ORIGINAL, INTERACTIVE SEMINAR ON TRADING USING
TECHNICAL ANALYSIS
 


Enter Symbol

U.S. QUOTES

Enter Symbol:

U.S. CHARTS

Enter Symbol:

TECHNICAL OPINION

Enter Symbol:

CANADIAN CHARTS

Enter Symbol


 SEC FILINGS

Search For:
 


Company Name
Ticker Symbol

 BROKER RESEARCH

Exclusive Broker

Research
Enter Ticker


 

 

The Traders Wheel
8/8/98 by Alan Farley

Greed and Fear

Stock chart pattern analysis unveils a world driven by lust and pain. The financial markets are about money. No other controlled substance awakens the best and worst of our humanity with quite so much intensity. When we risk our capital, the markets become our lovers, our bosses and the bullies who beat us up when we were kids. As assets shrink and swell, emotions flood in to cloud our reason, planning and self-discipline. Fight/flight impulses emerge and trigger unconscious (and inappropriate) buying and selling behavior.

Rising prices attract greed. Paper profits distort self-image and foster inappropriate use of margin. The addictive thrill of a stock rally draws in many participants looking for a quick buck. More jump on board just to take a joyride in the market’s amusement park. But greed-driven rallies will continue only as long as the "greater fool" mechanism holds. Eventually, growing excitement closes the mind to negative news as the crowd recognizes only positive reinforcement. Momentum fades and the uptrend finally ends.

Falling prices awaken fear. The rational mind sets artificial limits as profits evaporate or losses deepen. Corrections repeatedly pierce these boundaries, forcing animal instinct to replace reason. Destructive traits in the non-market personality invade the psyche of the wounded long. Short covering rallies raise false hopes and increase pain. The subsequent drop becomes unbearable and the long finally sells, just as the market reverses.

The impulse-driven crowd generates constant price imbalances that traders can exploit. But successful execution requires accuracy in both time and direction. Chart pattern analysis allows measurement of the emotional crowd’s impact on these key elements. Within the charting landscape, exact price triggers can be located where these unstable forces should erupt.

You can only capitalize on the emotions of others when you are able to control your own. Pattern analysis cautions the trader to stand apart from the crowd at all times. In simplest terms, they represent the attractive prey from which your livelihood is made. And just as a wild cat stalks the herd’s edge looking for a vulnerable meal, the trader must recognize opportunity by watching the daily grind of pattern swings and volume spikes.

 

Gaps reveal sudden and important changes in crowd sentiment
 better than any other pattern tool. Always distinguish between
 gaps made in the direction of the prevailing trend and those
 going against it. Countertrend gaps often flag major reversals
 without the need for a long series of price bars.

 

 
Article contributed by The HARD Right Edge, which presents highly original workshops, tutorials, strategies and resources on multi-trend technical analysis and and short term trading. Article reprinted here with permission, which presents highly original workshops, tutorials, strategies and resources on multi-trend technical analysis and and short term trading. Article reprinted here with permission.
 

 

 
Search for it at the TulipSearch Open Directory
Investment Bookstore Investment Newsstand Market Mavens Report

Questions or Comments? Contact Us

Copyright � 1998-1999 Tulips and Bears LLC.
All Rights Reserved.  Republication of this material,
including posting to message boards or news groups,
without the prior written consent of Tulips and Bears LLC
is strictly prohibited.


Last modified: April 02, 2000

Published By Tulips and Bears LLC