At the MarketVision Chronicle, I write about four emotional battles we all face with markets.
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We’ve now had six chronicles on trading concepts:
- Five questions for your trading plan
- Entry Strategy using Fundamentals
- Technicals as an Entry Point
- Understanding the Stop Loss
- The Macro Picture
- Position Sizing Techniques
This week, I’ll speak about a few emotional battles that every participant goes through.
Denial Can Be Disastrous
To any market player, most market moves are astounding. They surprise both in the direction and magnitude of the move. Stocks move against your careful analysis, and the first reaction that we get is one of denial. It’s easier, for our brains, to pretend that what we need to happen, is what should happen eventually, so everything against our view seems just fleeting and temporary.
When a stock starts to fall, you hear voices of support that the markets are full of manipulators who are keeping prices low. (Note: there is much more incentive for manipulators to keep prices high, and there are far more instances of market players manipulating to the upside) Even at a broad level, we tend to blame a market fall on FIIs exiting, the crisis in Europe etc. and then, refuse to sell because the India story is still strong.
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Editor’s Picks
A set of links chosen just for you (Visit our Picks section for a regular update)
The Silver Bear Cafe
The Silver Bear Cafe keeps its subscribers informed on issues that adversely affect the conservation of capital and strategies to preserve and increase ones financial security.
Italy Living on Borrowed Time – WSJ.com
Borrowing costs have dropped for Italy and Spain, but this happy state of affairs may not last, because both have substantial bonds still to sell and the ECB may not help.
Is It Time For The Financial World To Panic? 25 Reasons Why The Answer May Be Yes | ZeroHedge
Every now and then it is easy to forget that the one or two “better than expected” data points blasted by flashing headlines do nothing that merely mask what is an otherwise quite deplorable and deteriorating reality.
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Videos
Past Short Takes:
- Conversations: Buying a House in the US? With Manish Jain.
- Reviewing a ULIP: HDFC SL Crest
- Monthly Income Plans
- Conversations: Manish Jain on What’s Good About ULIPs
- What is VWAP?
- Liquid and Ultra Short Term Mutual Funds
- Five Stocks in Five Minutes: April 13, 2011
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