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Monday, 25 December 2017

5 Stages of Market Psychology

Five Investment psychology By Asian Investment Guru nickname God of Share Hu Li Yang

I am a fan of Master Hu Li Yang who has written many books on investment. This is one piece of article on investment psychology where amateur investors always made a mistake on and making huge losses on their investment journey, extract from his book title "Stock Invest A Hundred Strokes".  

I feel that this piece of article is an invaluable lesson an investor need to learn from prior to their investment journey to profit from the financial markets.

Master Hu Li Yang always said during his seminar workshop that humans are an emotional animal and stock markets is a reflection of price investing rather value investing in a company, buy low sell high in price creates value and vice versa buy high sell low price is a liability. humans tend to make mistakes again and again even though how history depicts of one drawn from the painful lesson of the past financial crises stem from the unsustainable animal spirit of bull or bear, either greed or fear when it comes to investing result in a chart with parabolic price movement.

With the current bitcoin euphoria and reaching an all time high of 19.666 US dollar in December 2017 in a short time frame span of a year which can be applied.

Below article sums up the essence of 5 steps of investing psychology.

"Each phase of a stock, then will naturally inspect the stock price. The trouble is, if it falls, I must secretly glad did not buy. When it rose, but began to move, a few days later could not help chasing, always buy at the highest point. What exactly is the problem?

Five investment psychology

When investors consider buying a stock elephant, they will go through five different stages of the mentality. The so-called Five Elements of Investment Psychology are: sour, disappointed, angry, crazy and vice versa. If you can not buy in time before the second song, you must not be sad, forget it!

In many investment tragedies, "blindly forcing high prices" will always be the top culprit. Many investors are often blindly chased after knowing that they have lost their chances for entry because of a lack of commitment.

In the face of a rising stock, there are roughly five stages in the investor's mindset changes. I call them the investment psychology fifties:

The first song: Suppose investors have selected a stock, while the price is 20 yuan, but based on picking up cheap psychology, want to wait until it cheaper to buy. Unexpectedly, the stock does not fall, but rose from 20 yuan to 22 yuan, this time investors in the heart "sour" "it will certainly return to 20 yuan" feeling.

The second song: When the stock continues to rise from 20 yuan to 24 yuan, investors began to feel the psychological "disappointment" feeling appeared on their own did not buy 20 yuan when quite regrettable.

The third song: When the stock rose to 26 yuan, the investor's psychology began to "angry", resentment, he will continue to curse the performance of this stock is baffling.

Fourth song: When the stock rose to 28 yuan, the investor's emotions will be close to "crazy", he was uneasy and murmur, and even the newspaper live on a piece of the stock I did not dare to read the news

Investment fifth song: It is also the most decisive step is, once the share price soared to 30 yuan, then the emotions of investors will suddenly have a big change of 180 degrees. He is no longer angry, no longer regret plum, but will think that only a share of the capital value of this price, but also think there is the possibility of further increases, why not always with their old? So he changed his mind, at 30 yuan When the time comes. Quite often, he was finally stuck in the upscale!

The reason why 30 yuan involved, nothing more than two reasons: one is to tell myself, even grab a short-term, you can earn two or three dollars; the other reason is the price of rising dizzying , Illusion that the stock has the potential to rise to 40-50 yuan, now involved, presumably there is a large difference can be earned. Like this very sympathetic example, I am not uncommon.

In view of this, if there is a sour feeling on the rising stock first, and then it begins to disappoint, that is your last chance to buy the stock. Once you miss this stage, your heart is already getting angry, When crazy, most will make a "crazy" decision.

Therefore, advise everyone, why the world's stock is so "dead-hearted" staring at a stock you missed?"




每次相中一只个股.接着自然会砚察股价。麻烦的是,它若下跌,一定暗自庆幸没买。当它上涨,反而开始心动,几天之后忍不住去追,总是买在最高点。问题究竟是出在什么地方呢?

投资人在考虑买进一只股象时,会经过5种不同阶段的心路历程、所谓的投资心理五部曲分别是:酸溜溜、失望、生气、疯狂与反过来认同。如果不能在第二部曲之前及时进场买进,则千万不可再眷恋不舍,忘了它吧!

在众多投资悲剧中,“盲目迫高价”永远是排名第一的祸首。许多投资人常常因为缺乏定力,在明知己经丧失了进场良机以后,还盲目地追涨,最后终遭惹火烧身的下场!

面对一只上涨的股票,投资人的心态变化大致有5个阶段,我称它们为投资心理五部曲:

第一部曲:假设投资人已选中某家股票,而当时的价位是20元,但基于捡便宜的心理,想等它再便宜一点时才买进。不料股票并不下跌,反而由20元涨到22元,这时候投资人的心里有“酸溜溜”的“它一定会回到20元“的感觉。

第二部曲:当股票由20元继续涨到24元时,投资人的心理就开始有“失望”的感觉出现,对自己没能在20元时买进相当后悔。

第三部曲:当股票再涨到26元时,投资人的心理开始转为“生气"、怨恨,他会不断诅咒这家股票的表现是莫名其妙。

第四部曲:当这只股票再涨到28元时,投资人的情绪就会接近“疯狂"了,他心神不宁且喃喃自语,甚至连报纸上住何一条有关这只个股的消息都不敢看了。

投资的第五部曲:也是最具决定性的一步是,一旦股价再涨到30元,这时候投资人的情绪会突然产生180度的大转变。他不再生气,也不再懊梅,反而会觉得这只个股本来就值这价钱,同时认为还有再往上涨的可能,何必老跟自己过不去呢?于是,他改变主意,在30元的时候进场。通常准得很,他终于在高档被套牢了!

之所以会在30元时介入,不外乎两个原因:一个是告诉自己,就算是抢个短线,也可以赚个两三块钱;另一个原因,是被不断上涨的价格冲昏了头、错觉这家股票有涨到40—50元的潜力,现在介入,想必还有一大段差价可赚。像这种令人非常同情的例子,我屡见不鲜。

有鉴于此,若对上涨中的股票先是有酸溜溜的感觉出现,紧接着又开始失望时,那就是你最后买进这家股票的机会,一旦错过了这个阶段,你的心里已步入生气、疯狂时,多半就会做出“疯狂”的决定。

因此.奉劝大家,天下的股票多得很何必要这么“死心眼”的盯着一家与你无缘的股票呢?

Artcile is extracted from http://www.zcaijing.com/touziyibaizhao/12816.html



Disclaimer: All news, information and charts shared is purely by my research and personal views only. This is not a trading recommendation or advice but on the basis of sharing information and educating the investment community. Different traders and investors adopt different trading strategies and risk management approach hence if in doubt please approach or seek clarifications with your Financial Adviser, Broker and Banker.