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Why the Psychology of Online Investing? |
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Some might be wondering what the value is of a book on the psychology of Internet trading. Isn't it just as simple as pushing buttons and hoping the trade goes our way? Do we really need to understand how our own thinking and emotions affect our trading habits? |
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Without understanding how our thinking and emotions influence our trading behavior, we will tend to unconsciously repeat the same mistakes over and over again. Whether you are a day trader or a long-term investor, your thinking and emotions will affect your decision making, your money management, and your overall investment outcomes. |
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From my perspective as a psychologist, this is obvious. But it is not so obvious to those who have never really considered their own habitual ways of dealing with money. By the time you finish this book, it will be obvious to you, too. |
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Here are some simple examples: Feeling fearful of making the wrong decision may block us from taking decisive action. Or: The tendency to be overly conservative may make us take profits too quickly on a rising stock. Or: Not considering carefully enough some of the factors affecting current trading conditions may prompt us to leap prematurely. Any of these things may happen to us occasionally. But it is the repeated mistake that we need to identify and understand, so that we may change our behavior. |
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Whom is The Disciplined Online Investor for? |
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This book will be most useful for those of you who already know how to push the right keys to trade on the computer. It is for all online traders and investors. It doesn't matter whether you are a "minute trader," who trades dozens of times per day, or just a few times per year. |
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I will be using the word trading in this book simply to indicate buying or selling a stocka stock transaction. Online investors, then, make trades when they execute a buy or sell, even if they are investing over the long term. |
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But when we think of the difference between approaches to the market, we need to remember that investing over the longer term is a bet that a company or an industry will improve its profitability or market share over time. Trading is a bet a stock will rise or fall in the |
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