Capitalizing on Fear and Greed

Capitalizing on Fear and Greed

From
the previous section, we determined that price movements result from
massive emotions of fear and greed regarding trader's position in the
market with a given stock.

Recognizing the footprints of greed
and fear is not difficult. Recognizing the signs that the rally or
decline before it happens is the difficult part of trading. How many
times has this situation happened to you: You enter a trade based on a
bullish reversal signal, but then exit on a slight pull back only too
see the stock rally to a new high after you exit.

Or how often
have you held on to a stock that experiences a bearish pull back in
hopes that it will turn around, only to see the stock plummet to new
lows before you finally concede to defeat and exit.

Unfortunately,
there is no system that can predict with 100% accuracy exactly where a
greed rally or fear sell off begins. There are; however, techniques
based on candlestick patterns that help us locate probable areas for
these turning points. The rest of this section will explore the
techniques in identifying those probable areas that properly managed
will result in profits for the trader in the long run.


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all this post by caffein_blue
owner of www.belajarmarketiva.com