{"id":920,"date":"2010-02-07T15:41:38","date_gmt":"2010-02-07T19:41:38","guid":{"rendered":"http:\/\/www.silver-investor.com\/blog\/?p=126"},"modified":"2018-06-10T10:58:23","modified_gmt":"2018-06-10T10:58:23","slug":"they-bail-we-buy","status":"publish","type":"post","link":"https:\/\/www.themorganreport.com\/blog\/they-bail-we-buy\/","title":{"rendered":"They Bail we Buy…"},"content":{"rendered":"

\u00a0
\nGold & SP500 Psychology:\u00a0 They Bail, We Buy
\n<\/strong>by\u00a0<\/strong>Chris Vermeulen
\nUnderstanding market psychology is crucial for a trader\u2019s success. But so many people get caught up in the daily market volatility, media coverage and \u201cnoise\u201d of the trading environment, it\u2019s almost impossible to not think and trade in agreement with the majority of traders.
\nHowever, effective technical\u00a0analysis allows us to use trends,\u00a0patterns and other indicators\u00a0to evaluate\u00a0the market’s current psychological state.\u00a0 Fortunately, this analysis can both enable us to independently<\/em> forecast whether the market is heading in an\u00a0upward or\u00a0downward trend and do so against the grain of the majority.
\nIt takes a disciplined trader to be able to watch and listen to the market doing one thing, filter out the noise, then do the opposite – all in a controlled manor. To this day I still find myself fighting the herd mentality at times and that is when I step away from the computer and regroup.
\nI have a simple rule that has saved me thousands over the years. I would rather miss a trade and learn what caused me to get confused, then to take a loss.\u00a0
\n\u00a0<\/strong>
\nRule # 1 – When in Doubt, Stay Out!<\/strong>
\nThere are two types of traders:<\/strong><\/p>\n

    \n
  1. Herd Mentality Trader \u2013 Someone who trades off fear and greed buying near tops and panic selling out at the bottom with the masses.<\/li>\n
  2. Black Sheep Trader \u2013 A trader who stand apart from the masses and trades opposite to the \u201cherd\u201d during extreme levels.<\/li>\n<\/ol>\n

    \u00a0
    \nLast weeks market action really allowed us to see which way the masses were moving. The extremely high selling volume and sharp price decline notified us that the market was trading off FEAR. And, last Thursday we actually saw PANIC which tells us the balance of the market (retail investors, John Doe\u2019s, The \u201cHerd\u201d) were exiting their positions.
    \nWhen we see this happen, it\u2019s generally a good time to start scaling into long positions, as most of the down side has already happened.
    \nI have been talking about an ABC retrace pattern for the indexes and gold for some time and last week we got just that. An ABC retrace is when we have 3 waves which are, down, small up, then another leg down.
    \nIn short this wave breaks the uptrend of higher highs and lows, as it forms a lower low telling novice traders to sell and go short. This is what causes the high volume and sharp sell offs.
    \nBelow are a few charts showing the 2009 July lows and where we are now, February 2010:
    \nFor charts click here:<\/a>
    \nSP500 \u2013 Daily Trading Chart<\/strong>
    \nSP500 \u2013 Daily Trading Chart<\/strong>
    \nSP500 \u2013 Daily Trading Chart<\/strong>
    \nSP500 \u2013 Daily Trading Chart<\/strong>
    \n\u00a0<\/strong>
    \nIntraday Price Action \u2013 <\/strong>If you want to see some exciting intraday trading charts check out the setups last week:     http:\/\/www.thegoldandoilguy.com\/articles\/how-to-trade-intraday-gold-and-sp500\/<\/a>
    \nMarket Psychology Trading Conclusion:<\/strong>
    \nMost get involved with the stock market because it looks like something they can quickly learn and start making money from home. But it doesn\u2019t take long before they quickly realize there is more to trading than meets the eye.
    \nWhile trading looks easy from a glance, in actuality I think its one of the toughest jobs out there.
    \nWhy?\u00a0 Well, this is what you are up against:<\/p>\n

      \n
    1. You are trying to predict something that is unpredictable<\/li>\n
    2. You are trading against millions of other highly skilled traders<\/li>\n
    3. You are trading against automated computers with complex algorithms<\/li>\n
    4. You are trading with your hard earned money which causes fear and greed<\/li>\n
    5. You must accept losing trades as that is part of the business<\/li>\n
    6. You must trade with a proven trading strategy and follow the system<\/li>\n
    7. You must understand money management and apply it to every trade<\/li>\n
    8. You must truly love the market cause it will break you down mentally<\/li>\n<\/ol>\n

      \u00a0
      \nI don\u2019t want to say you must be a contrarian, but in reality you must do the opposite of the masses during times of extreme price behavior.
      \nThese extremes happen on a daily basis when trading intraday charts and every 4-6 weeks when looking at daily charts. The toughest part is to pull the trigger when emotions are flying high in the market and you are looking to do the opposite. It takes several trades before you even start to get comfortable doing this.
      \nI hope this helps shed some light on market psychology.
      \nIf you would like to receive my Trading Newsletter and Analysis please visit my website:       www.GoldAndOilGuy.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

      \u00a0 Gold & SP500 Psychology:\u00a0 They Bail, We Buy by\u00a0Chris Vermeulen Understanding market psychology is crucial for a trader\u2019s success. But so many people get caught up in the daily market volatility, media coverage and \u201cnoise\u201d of the trading environment, it\u2019s almost impossible to not think and trade in agreement with the majority of traders.More<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[121,89],"tags":[],"yoast_head":"\nThey Bail we Buy...<\/title>\n<meta name=\"description\" content=\"They Bail we Buy...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.themorganreport.com\/blog\/they-bail-we-buy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"They Bail we Buy...\" \/>\n<meta property=\"og:description\" content=\"They Bail we 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