There are two powerful forces behind the success in the stock market-greed and fear. These two human emotions drive the stock market. While letting these emotions get the best of you can prove detrimental, harnessing them is the crucial key for success in the stock market. The market has and will always remain a volatile monster. It has the power to make traders feel very extreme emotions. These emotions are the driving forces behind the scenes, the inner workings that make the market go.
Webster’s Dictionary defines greed as a selfish and excessive desire for more of something (such as money) than is needed. It is very easy for investors to get tangled up in greed. With that said, desire is a regular component of human nature. It only becomes a problem when that desire spins out of control into something extreme and sometimes uncontrollable-greed.
Some people get on board with the stock market believing it’s a get-money-quick tactic. While that can be the case in certain circumstances, it is certainly not always. People are always looking for ways to make the most money in the shortest amount of time possible. Since investments can turn a quick profit, people are quick to jump on board.
This greed can lead to impulsive investments, controlling the way people trade in the stock market. Greed can make people change their plans and make rash decisions all because they’re trying to make money quickly. For that reason, promising yourself to stick to a predetermined plan is crucial before you feel even a hint of greed.
The funny thing about fear is that it can play a variety of roles in people’s lives. Some people are fearful of failure while others are fearful of success. Fear is a dangerous and powerful emotion because it can take on so many different forms. Stock investment requires you take a risk, and risk-taking can spur on fear in a great percentage of human beings. The way that people channel the fear is what differs from person-to-person.
When deciding to get involved in the stock market, you must first do some research. The most important research you must conduct is not on the market, but on yourself. Know your limits, and know your motives. Get to know your weaknesses just as well as your strengths. Think about how fear and greed affect other aspects of your life outside the stock market. Think about the ways in which money motivates you. Think about all the reasons why you want to be involved with investing to begin with. Acknowledging the power of greed and fear before even opening the door to the stock market will help you to better manage these feelings if they should arise.
If you’re looking to get involved in your own investment plan, it is crucial to fully understand the roles that greed and fear can play. Letting these emotions spin out of control can bring about the demise of even the most fruitful stock trader. The management of one’s greed and fear will directly affect the success of an investment strategy.
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