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