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trading-logic vs emotion?
3 Answers
<p>Trading market, it’s a combination of both. Technical analysis is the translation of Behavioural finance in charts. As behavioural finance deals mostly with cognitive and emotional biases that make investors and traders act in a specific way, technical analysis quantifies these acts into the charts and other mathematical indicators. For example, the failing bullish momentum (i.e. the buyers are leaving slowly and losing force or they believe that we’re already too high), can be seen in a bearish divergence with a technical indicator. Another example is the support and resistance levels which can be seen as psychological levels to some …</p>
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<p>The emotional side is the uninformed, misinformed, and the gamblers. There are new investors, misinformed retail investors and retail traders, and poorly educations small funds managers. The logical side are all the professionals, institutions, and wise investors who make decisions on logic, risk assessment, and analysis.</p>
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<p><br>The market is neither emotional nor logical; it doesn’t have any feelings whatsoever. It’s the people who project and act on their individual emotions. So collectively it’s either fear that drives selling or greed that spurs buying.</p>
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