Coping with volatility

When in a bull market or a bear market, it is relatively easy – the key word is relatively, here – to predict the general direction of a stock: up or down. However, in today’s current market volatility, it seems as though guesstimates for a stock movement (or even the whole market!) may as well be


Why trust charts

Any security containing price data over a period of time can be demonstrated in a chart, and this is why charts are the weapons of choice for technical analysts. When certain trends are identified, specific names are given to them. For example, the “head and shoulders” is a name given to a chart pattern that


Japanese Candlesticks – An introduction

Line charts and bar charts are common methods of displaying price information on a chart. However oHowevJapanese Candlesticks are another popular way to interpret charts due to their superior ability to convey crucial information about the price action. There are many Japanese candlestick patterns around, so we will simply introduce the concept of Japanese Candlesticks


Top-down vs bottom-up investing

When deciding what shares to invest in next, many investors select one of two popular types of investing – the top-down or the bottom-up techniques. The approaches are both at stark odds to each other and investors usually heavily favour one approach to the other. But what do these techniques involve – and is one


Confidence and paranoia in the market

One of the most fundamental aspects of investing has nothing to do with charts, prices, financial data or economic news. As most market psychologists will tell you, our emotions can play just as a big role in our investing decisions. It’s ridiculous to think that every investor works without emotion, because emotions are part of


Making Your Exits Easier

There are two schools of thought when it comes to exiting losing trades. The first says you should never make the decision yourself – for any trade! This school says that once you’ve entered a position, you should only let the market take you out. This holds for both directions: a losing trade should see


How the sharemarket works

The Australian sharemarket, known as “ASX”, is our nation’s securities exchange. The ASX is the key means through which investors and traders can buy and sell shares within Australia. The Top 200 index The S&P/ASX 200 index is the main benchmark for the Australian equity market. While there are over 2000 shares listed on the


Stay open to change

Believe it or not, stress can help us become better traders. Famed trading psychologist, Brett Steenbarger, is an expert in using normal behavioural psychology and linking it to our trading behaviours. Because, after all, trading behaviour is another form of human behaviour. Steenbarger has investigated the role of intensity, distress and change in the behaviour


The danger of overconfidence

Famed trading psychologist Bret Steenbarger has written countless articles on the most common emotions traders feel that causes damage: panic. However, there is an emotion that exists right up at the other end of the scale that can cause just as much damage to your trading portfolio, and that is overconfidence. Overconfidence overview Overconfidence is


An introduction to regressive trading

An introduction to regressive trading The word “regressive” can be defined as “reverting to an earlier condition or way of behaving”. When we are trading in a regressive manner, we are looking to take advantage of a counter-move in an already defined trend in the hope that price action will soon revert back to this