| It is natural human instinct to follow | | | | the turning points in trends and |
| the crowd, but when trading stocks that | | | | developing a plan to profit from them. |
| may not always be the best thing to do. | | | | While this might sound simple, some say |
| One argument states that if everyone | | | | that it is actually impossible to |
| else is selling, then you should be | | | | predict a turning point. People can have |
| buying, and if everyone else is buying, | | | | a good feeling about what's going to |
| then you should be selling. A successful | | | | happen in the future, but no one can |
| trader knows how to see a trend before | | | | actually predict the future. So, |
| it begins and therefore can sell / buy | | | | traders do need to be prepared for their |
| before the masses do. However, some | | | | plans to fail, in the worst case. |
| people find it difficult to break away | | | | In order to trade against the herd, you |
| from the crowd- they find safety and | | | | cannot be afraid of risk. A trader who |
| comfort in numbers. | | | | can successfully operate on their own |
| Should I ever follow the crowd? | | | | course needs to be self confident and |
| When investing, it is sometimes useful | | | | not need any outside assurance in order |
| to conform to the masses. If you are a | | | | to succeed. They must believe that their |
| long-term investor, it is usually | | | | plan will work and be willing to put |
| beneficial to put your money in stocks | | | | their money on the line. Being afraid of |
| that don't have high levels of | | | | losing is not advantageous to success. |
| instability. The stocks should have | | | | Trading against the herd takes a lot of |
| indicators that the masses will continue | | | | experience and thought. Traders need to |
| to push it forward for the coming years. | | | | study the market for years in order to |
| It is usually a safe investment if you | | | | develop their plans. Gaining expertise |
| put your money in the stocks of | | | | of the market and perfecting trading |
| companies that the masses believe in. If | | | | skills is the only way that traders can |
| you do not feel comfortable taking | | | | move away from the masses and still |
| risks, follow the crowd. If you follow | | | | trade with a consistent profit. It is |
| the crowd, you will usually still be | | | | not an easy task. |
| able to make a profit. Choosing to stick | | | | An experienced trader knows how to |
| with the herd or not should be dependent | | | | foresee the trends and act before the |
| on how big of a risk you are willing to | | | | masses do. For someone that is |
| take. | | | | experienced and understands the markets, |
| When should I follow my own course? | | | | trading against the masses is the best |
| When traders are looking for a big | | | | way to make a large profit. But for an |
| profit, it is usually best for them to | | | | inexperienced trader or one who does not |
| jump off the bandwagon and follow their | | | | want to take a major risk, it might be |
| own course. In this case, a trader wants | | | | best to stick with the herd. This will |
| to guess what the crowd will do next and | | | | help minimize losses and maintain a safe |
| benefit from it by being one step ahead | | | | profit. |
| of everyone else. The biggest profits | | | | Whatever your stance might be on buying |
| often come when doing this, but that is | | | | stock, be prepared and do your homework |
| also where the biggest losses are found. | | | | before any decisions are made. Don't |
| The difficult part for a trader | | | | shoot with your eyes closed. |
| following their own course is finding | | | | |