Lemmings, small rodents best known for an instinct to charge off jagged cliffs to their deaths en masse, have immortalized the term “lemming effect.” A lemming effect signifies an event where the collective actions compel the herd to stay within the group, only to meet with tragic results in the end. This is also an effective metaphor for the stock market, where millions of investors will follow the crowd at both ends of the extreme: up or down, bullish or bearish, with tragic results as they overplay their position. While otherwise intelligent, these people can’t seem to help themselves when the trends sputter to an end yet they continue in that direction, and then compound the problem by failing to confront the fact that their ride is over. Read on to learn more...
Successful professional traders know that their greatest enemy is in their own minds. The emotions of fear and greed are more powerful than any market forces in creating losses.
How to better handle emotions such as fear and greed is by far the most important aspect of becoming a successful and consistently profitable trader.
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Technical analysis focuses on market action — specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering which stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.