Price And Emotions And The Roles They Play
When the price goes up it is because the seller thinks it is worth more or there is a short supply of stock available.
The opposite happens when there is an excess of stock available, this effectively pushes the price downwards. So the current share price is an accurate gauge of the market value of the stock at this point in time.
PRICE is involved when you buy the stock, your potential exit price to limit losses [stop loss] and potential exit price to make your profits.
- GREED will push the price up. FEAR will push the price down.
- A low priced speculative stock is often priced as it is because it has not attracted the interest of a wide section of the market. Price is effected by as much by Inaction as well as by Action.
- The closing price is a reflection that shows how traders are relating to that stock. It is a reading of whether there is "excitement" or "rejection of that stock.
- When you are buying a "stock" you have four options open to you.
- 1. You can stay with your original price and wait for the share price to come down to you.
- 2. You can chase the price and collect the shares you have decided on.
- 3. Still chase the price but keep the same dollar value but get fewer shares.
- 4. Buy your stock at the asking price.
Remember our decision to buy does not happen if there is no one wants to sell at that price. We are also powerless if someone is bidding a higher price for the stock than we are.
They will get the stock unless you put in a higher bid. (This is dependent on how much stock is available at the time.)
THE TWO MOST COMMON EMOTIONS ENCOUNTERED.
The most common is" FEAR and "GREED."
And what effect do they have?
Here is a "Classis" example of what is happening on the stock market every day World wide.
Firstly Greed pushes the stock price upwards and Fear has the opposite effect by pushing the share price downwards.
Greedy traders start rushing in to get the stock at any price so they won't miss out. . Then finding the share price suddenly reversing as "Smart traders are taking their profits" which then has the effect of causing the stock to commence sliding backwards as excess stock is now available.
This is the time when Fear sets in. The traders start to panic and start selling so as not to take too big a loss.
This puts more stock into the market, which accentuates the price slide downwards.
The smart traders who sold out at the "high" are now buying back the same stock at reduced prices.
As I have said before. How often does this happen? Every day somewhere in the Market this is occurring.
How do I know? I have been caught myself when I began trading and no doubt I shall get caught again. But now I am more aware of these "EMOTIONS."
Related Tags: fear, price, shares, profit, emotions, greed
Christopher Strudwick is a keen amateur investor on the Australian Stock Market. Visit his weblog for more articles and useful information at http://www.asxnewbie.com
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- Sbi Best Sip Plans 2010
SBI Mutual funds have introduced many mutual schemes. Each scheme has different limitations. SBI SIP - Icici Sip Plans 2010 - Best Sip Plans
ICICI Prudential offers many schemes. These fund schemes have SIP. What is SIP? SIP's expansion is S - Determining Where To Invest Money
There are several kinds of investments, also you will find numerous factors to find out where to inv - Retirement Plans A Necessity Of Life
A person works whole life to give a decent upbringing to his children and families. But while improv - Stock Market Timing Signals
Follow the PlanThis would seem a statement of common sense, but the fact of stock market timing sign - A Selection Of Financial And Investment Strategy Guidelines For Turning A Profit
Yet, we don't often have the money to leave work right at this moment. We need a constant salary to - Find Out The Profitable Way To Invest In Small Cap Stocks
Everyone wants to find a penny stocks list or other investment strategies that can turn your literal - Portfolio #4 - Watergate
IntroductionThe problem is not that the world is running out of water. No, the problem is that drink - Dulton Group: Information Content Of Dividends
Dulton Group helps you to analyze the information content of dividends, an important factor affectin - Coping With Fear In A Markets
The real fact is that all traders, investors as well as stock market investors, who feel afraid, occ
Most viewed articles in this category:
- Investor Stress: A New Approach
George Muzea is both an investor and a stock market advisor. In any given month, he will be paid $10 - Real Estate Investment Financing
1. Location: Your real estate investment's location is arguably the most important component of your - Canadian Oil Sands - Who Are the Major Players
The Canadian oil sands represent one of the most lucrative investment opportunities to oil and gas i - Why Bulk Preconstruction?
Bulk preconstruction is the latest trend in secure, high profit real estate investing. By buying wit - Investing - It Is Not As Scary As You Think
Many people want to have more money - OK everyone does. However, most people don't know how to go a - How Do I Know Which Programs Are Scams?
Although it is virtually impossible to tell if a HYIP is a scam until the moment when they stop payi - Currency Trading Success - 6 Tips to Increase your Profits
If you want to increase your profit potential and achieve currency trading success then the simple t - The Business Cycle
Investors who want to beat the market should be followers of the business cycle. The business cycle - Pros and Cons of Real Estate
Like any other profession, there are good and bad things about what are available. Each of the thin - The Fixer Upper
Real estate investing has become almost a national pastime. Millions are made every year on the buyi
