Saturday, January 3, 2009
Fear vs. Greed
I'm feeling philosophical with the start of the new year. I've been thinking about the old axiom that stock prices are moved by fear and greed. But when you think about it, greed can really be thought of as another form of fear. There is the fear of losing money and the fear of missing out on an opportunity to make money. So before you put on a trade you have to accept the risk involved and realize that it is possible for you to lose money. But you also have to be relaxed and not be afraid of missing a big move. Like in surfing, there is always another wave coming right behind the current wave.
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5 comments:
Hi Rick,
Nice blog you have here. I noticed that you are a beginning trader. Have you check out Tyler's blog (AmIbald)? He is also new and trading and also has some good stuff he's sharing. I am just paper trading right now, hoping to move into real time within a year.
have a great 2009!,
Z
Yes, I do read Tyler's blog. If we can get half as good as Trader Jamie then we'll be doing just fine. I like how the volatility is starting to come down. It's been pretty insane since September.
Hi Rick,
Yes, I have been paying attention to the VIX too. Based on your experiance thus far, do you feel trading is more manageable for you once VIX returns to noraml, ie: under 40 or so?
-Z
Rick,
Great post! I have never thought about greed that way, but it makes sense. I also have to say that I have been trading a lot better now that I realize a good trade will always come my way. I have not been chasing stocks like I sometimes would in the past.
Good luck this year!
Tyler
Thanks Tyler. Z, for my style of trading I do prefer when the VIX is a little lower. There are fast reflex traders out there who love the lightspeed conditions but I'm not one of them.
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