Look over your shoulder
When trading it’s easy to get carried away with a move in the market. The prices is rising and you instinctively want to follow it as it charges off in one direction or another. You sit there and ponder your move then make the decision to jump in. Just as you do it goes the other way and you sit there waiting for it to rebound into profit, it continues to fall and then you can’t stand it any more and cut out. No sooner do you cut out than the price moves the other way, you jump back in and then you find you exit too early as the price soars off in the direction you picked. At that point you look over your shoulder as you could swear that somebody was watching you and waiting for you to click that button!
Why does this happen?
The answer lies in a little bit of psychology, namely fear and greed. I’ve published this image before, a couple of years ago in the newsletter, but I think it illustrates very well why people get into the market at the wrong time, exit at the wrong time and then fail to take their full profits.
Initially as the price moves, you feel a need to jump on a price movement, fearing you may have missed out. It turns out you were too late and the move has already happened and as the price falls back below your entry point, you bail out. This time you get in again and as the price rises you get nervous so you close your position, to be safe. Of course it sails well past your exit point and typically, if you have been in and out already, your hand is forced again by your previous memory of your prior unsuccessful entry.
This graphic illustrates these issues better than words but the summary is, let the market be your slave, not your master. Don’t follow it, try and be contrary.
Category: Using Bet Angel
