Avoiding the emotional trapsWhy is it so important to think about emotions when it comes to investing?Emotions lead us to make bad decisions when investing our money. We tend to attach more than monetary value to money; sometimes we put our ego on the line with it. For example, we may buy a stock for $50, watch it go down to $30, and refuse to sell it until it goes back up to $50 because we don't want to admit failure. That's just one example of how emotions can get in the way of...
You’re surrounded by opportunities to put your money into one thing or another. But doing so means taking a risk: You know you could lose part or even all of it, but you hope you’ll win back more—a lot more. Where are you?Knowing only the above, you could be on Wall Street or in Las Vegas. However, investing in securities differs markedly from gambling on a horse or a hand. Unlike betting on double-zero, putting your money in legitimate investments gives you a tangible, immediate asset...
Is a donkey bullish? Is an elephant bearish? Or does it matter at all to financial markets which party occupies the White House? A look back at market performance as measured by the Dow Jones Industrial Average across 18 administrations suggests that using such political equations to predict financial markets is, well, mostly bull. As presidential candidate of USA once put it, it’s the economy, stupid.Consider the presidents who have presided over bull markets. The single longest bull run in...
Many investment magazines and books offer asset allocation advice. That is, they help you decide how much to invest in asset classes like large-caps, small-caps, international stocks, bonds and cash.Asset allocation is important, but it is also important to implement an asset allocation plan intelligently. This means developing a strategy for deciding which types of securities and mutual funds to hold within these broad asset classes.What is core and explore? Recently, I did some work on...
Is there such a thing as a summer market rally? The theory that the market heats up along with the weather has kicked around Wall Street for years. There is evidence to support the idea. A study of historical data shows that the average monthly returns of the S&P 500 do rise during the summer, traditionally defined as the period between Memorial Day and Labor Day.Average Total Monthly Returns of the S&P 500 from 1926Jan1.7 %Feb0.7...
The trading performance is closely related to the trading personality. Every trader is different and depending on the personality, it is easier to find the right way to trade.Every trader is different and depending on the personality, it is easier to find the right way to trade. What are the main trading styles? What are the main trading styles? How to figure out which trading style is most suitable to your personality? How to figure out which trading style is most suitable to your personality?Trading...
Why do our emotions take over our trading?"Computer cigarette and coffee on the desk, the agonizing wait for price developments ....." Making money on the stock exchange involves passing by arguments that are not comfortable on a psychological level.On your operations (round trips) performed in one year, you'll have 80% of annual earnings. The rest will consist of small gains and small losses are not significant, knowing that assumes that the person is serious in its trading...
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