Fear, Greed and Trading
What good is a plan, if you can not, or do not, execute
Fear and Trading
How do you make decisions when those decisions affect
something you hold dearly?
Meaning, your money!
First, fear doesn't form in a vacuum. It is a learned response. In the case
of market timing, when you have a buy or sell signal that goes bad, the regret
and frustration can carry over into the NEXT buy or sell. Or worse, the fear
is so consuming, that you don't even enter your next trade.
Of course, Murphy's Law dictates that the buy or sell signal
you don't enter is the one you should have entered, which
only compounds the fear and frustration.
genius for profits derived from your trading strategy."
This particular problem is made much worse if you enter every buy or sell with
the "expectation" that it must be profitable.
If you believe that, then here is an important piece of information for you - "not
every buy or sell will be profitable!"
Greed and Trading
Greed creates the opposite problem.
After several winning trades, the feeling of invincibility supersedes being logical.
This will ultimately lead you ignore a successful timing strategy and into trades
that you normally would not have entered.
Successful market timing is only accomplished by sticking to a proven timing
strategy. But entering losing trades, and ignoring your trading plan, seems to
get much easier after a couple of winning trades.
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Never mistake genius for profits derived from your trading
-- Genius loses money.
-- Trading plans make money.
We All Want To Be Bullish
The difference between being "emotional" and being "blinded" by fear and greed
is indeed critical to success.
Experienced market timers know this.
A strategy can go for years making profit after profit, and then the markets
do what they do best. They frustrate us. We enter a volatile sideways market
that is virtually untradable.
It happens. But it "always" ends. And most importantly, if we don't take the
trade that hits the jackpot, it will only re enforce our fears.
important to recognize your emotions, and more
importantly, how they affect your investing approach"
Every trade MUST be taken. If aggressive trading is
taking it's toll on you emotionally, use a strategy that
works in all markets, like our Conservative S&P Timer.
But keep trading. The only way to market timing success is to make the trades.
-- Fear blinds us to opportunity.
-- Greed blinds us to danger.
It's important to recognize your emotions, and more importantly, how they affect
your investing approach. In general, we all want to be bullish, and are eager
to see any upward market movement as a rally, even when it's not.
Are fear and greed driving your investment decisions right now? If you are
trading the aggressive Bull & Bear Pro Timer strategy, but in reality you
are just looking for a timing strategy to keep you invested during advancing
trends, and protected from bear markets, then you are in the wrong strategy!
Aggressive market timing is for "aggressive" timers. Those trying to wring
as much profit out of the market as they can, and willing to accept short term
losses as the price for achieving above average long term profits.
Aggressive timers are unfazed by the ups and downs of
an aggressive timing strategy.
If you're not sure, or you are concerned about frequent trading, I'd recommend
using the Conservative S&P Timer, or possibly our Diversified Timing Strategy,
which has some aggressive and some conservative positions, is the answer for
Whatever you do, whichever strategy is right for you, stick to the plan!
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Disclaimer: The financial markets are risky. Investing is
risky. Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy or
sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that
future results will be profitable.