Trade Up

This is a very interesting question, and not one which I have seen mentioned. Can successful Traders have a conscience? When a Trader is in working mode, I do not think that they can afford to have a real conscience, and also be successful. To have a conscience is to deal on emotion. A good Trader will only see a commodity, not the investment itself. They are always dealing on trends / fundamentals, and have no feelings for or against the underlying investment. E.g. they would have no problem dealing in Tobacco or Gambling stocks, to name but a few. I believe that you could give a Trader a number of graphs, and not even price them, or say what they are, and they could make their mind up about a possible trade. What do you think? OBVIOUSLY THIS ONLY APPLIES TO LEGAL INVESTMENTS

Perhaps another way to describe "overbought" and "oversold" would be relative strength? Relative strength against the market / sector, etc is an easily definable variable. It can also be a very useful indicator, especially for the short term trader. The beauty about markets is that no matter how hard we try to track and predict movements, we can never be sure. That is why we all enjoy the challenge that the "market" offers. Its every Trader against the market!!

Fear and Greed in small doses are very useful emotions, but they need to be balanced. If one of them is a lot stronger than the other, then this will be reflected in your trading history. It would have been interesting to see what people thought in the 1980s pre-crash market and the 1990s technology boom. I bet it would be a lot different to todays trader mentality.

A good trader has to feel comfortable with every decision which they make. There is no point thinking "The market looks weak, I am going to go short" then seeing a stock you like, and going long. Its like paddling in a tidal wave if the market is not right. It is strange, but you do develop a feel for the market, and within seconds you can do figures in your head to see if a stock looks good value. You can teach people about markets, but if they dont have a genuine interest and "feel" for the market, they will never be Great Traders.

As we all know, Fear and Greed drive the stockmarket - and life in general. The fear of failure and the pursuit of more (Greed). What drives you most in your trading ? I must admit that I am slightly more driven by fear, than I am driven by greed. There are a few times when I have sold stocks too early, in a knee jerk reaction to a short term fall. I am however starting to balance the fear and greed factors, which is helping my trading performance.

Let us hope that these kind of sentences will deter other potential frauds in the future........although with the amounts of money involved, I fear it will not have a major impact. I always have this nagging feeling that some of the "lesser names" get off lightly, when I see the "top boys" hit with the big fines, and sentences. As we all know, some of the "top boys" in industry are only figure heads, but they are often made an example of.

I also think that the entry point is more important than the exit point. Until you have an entry point, you do not have a position to trade, no position = no potential profit. After taking the plunge to buy a stock (assuming you have bought the right stock at the right time) it is up to you how greedy, or fearful you want to be. Greed = potentially holding on for too long Fear = the fear of losing, or reducing a profit Fear and Greed are what makes the market go around.

There are a number of factors within the market which seem to stay constant, e.g. people over buying on good news and people over selling on bad news. The trick to reading the markets is to learn the language of the market. If you know what to listen for, markets can tell you a lot about the future movement of stocks. Like Soultrader said, after a while studying the markets, you will begin to pick up some of the signals.

Some decent comments above - while averaging down can work, I would not recommend it everytime. FTT, I presume that this is something you have only tried a few times? Why not buy on the bounce or look for stronger stocks - there are enough around! While we are all Traders, there is no point taking too much risk - after all, we all want to live to fight another day.