Friday, October 08, 2010

“How Human Psychology effect desired results in Stock Markets”

When any body in this world starts trading or investing in stock market have some curiosity, fear and hope regarding the future ahead. People are tend to take very cautious approach while in their initial trades. They are satisfied even if they get 1 or 2 % return in few weeks. But in that time frame they had learnt that stocks are moving up and down very quickly. Moreover they even give a swing of 5 to 6 % daily. Then the real temptation comes into the mind forgetting the basic facts of the stock market. Now the greedy not intelligent mind comes into act. Who thinks to earn those 5-6% swings daily. Which turn many into greedy traders. Now the search starts for those stocks which give 5-6% swing daily, but forgetting the fact that nobody can ever get that whole swing in stocks. Not even those so called operators of the stock. The true evidence of stock market is you can never buy a stock at low and sell at high. Mind understands it but emotional heart can never and moreover heart never let the hope die. It tries every odd time in stock market to buy at low or sell at high but in vain except few lucky times. Whenever we fail to achieve the desired results we tend to blame GOD for our bad luck. Not understanding the fault of being over intelligent than stock market itself.

“The moment I buy any stock the very same time it shows negative signs, the stock starts tumbling down and vice versa. Why this all happens to me always. I can’t earn in stock market, I am not lucky enough to earn in stock market but still I want to continue and try again and wait for my good luck. Now, I have understood how market works. This time it will be a different story for me and so on………..” It is a common universal complaint of every investor and trader in stock market except few thinkers. So, In stock market nobody can ever predict a low or high of any stock or index. This has to be understood that lows and highs are meant to be broken in every future.

As in my previous articles I always emphasis on emotions to be the one and only enemy of profit in stock market. Now, in this article I would like to more elaborate the word emotions in stock market, specially the functioning of emotions which most of the time results into a monetary loss or opportunity loss. When we buy any stock on back of our tempting perception for a quick gain, we should always be ready for quick loss too but sorry we are not rather we would prefer holding the stock till it comes back to the buying price and after more fall for minimizing bit of our losses. Yes it is called as “Falling Hopes” which usually turns into an “Adamant Approach” towards stock and most of the time ends at a “Forced Quit.”

Do you know why stocks behave negatively after our purchase or sell because we think we are more aware and more intelligent than those few big fishes of the market who rules more than 60% volume of the market. We think they do not know that stock is available at cheap price or too expensive, company fundamentals or new orders, open interest or delivery position. It is very heart breaking to say that stock market works only 10% on fundamentals remaining 90% on demand and supply created (Speculation). Those who want to earn in stock market should understand these facts thoroughly. Wise is not who thinks opposite from a professional player but who follows them with other options open…………