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It is likely that you have already decided not to use a full-service broker because of cost. Rather than hand your money over to a broker to manage, you believe you can do just as well or even better yourself. |
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Perhaps you have been influenced by the numerous ads on financial TV channels that encourage you to take your own financial future into your hands and trade for yourself. These ads have whet your appetite for quick riches through trading. We watch others strike the vein of gold through trading volatile, fast-moving stocks and we want some of the easy money ourselves. |
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The Disciplined Online Investor is the first book aimed at helping online traders understand their own thoughts and feelings while they are trading. It will address the psychological forces that affect you, the individual trader, as you sit at your computer and go through the process of making a trade. And it will help you gain insight into the psychology of the market, so that you may better understand, predict, and anticipate the moves of others. |
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From my perspective, it is not the economy, interest rates, company earnings, stock stories, business cycles, political maneuverings, astrologic, atmospheric, or seasonal influences that dictate the ups and downs of the market. While some or all of these factors definitely play a part in short-, medium-, and long-term market swings, they are not the most basic ingredient. |
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The most crucial factor is this: How individual and institutional traders interpret all of these different forces in the various markets and their actions based on their interpretations. |
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This is what determines why a change in a company's future prospects, a change in federal fund rates, a change in earnings, a stock splitor any number of other small or large changesare (or are not) taken seriously. When what traders tell themselves about these events changes quickly and drastically, you can bet that the market will move with these perceptions. |
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The answer, then, to the question as to why we must value psychology is simple. We value the psychology of you, the individual trader, and the psychology of the "market" (or the mass of other traders) because it is psychology that shapes and moves the market. This is why understanding our own thoughts and feelings while trading online and having some sense of the psychology of others is so important. |
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