Do you know why you sold your stock?
At first glance, this sounds like a stupid question, but surprisingly, the trader does not really realize the reason they first sold it.
Let's look at a few reasons. Perhaps you may recognize these reasons in your own trading history.
Fun The first major reason is to make a profit. Because this is not the main reason we are trading in the stock market. Are not we …? While I have to admit I do not know sometimes to look at some of the traders' irrational behavior you see currently traded in the market.
Look at the current behavior of the Australian equity market over the past month and you will see thousands of stocks being sold at a loss. Two of the main causes are panic and fear.
There is an acronym, I like it, it's a fear. This is "holiday appears real". This is definitely happening at all times.
A good example is the recent deterioration of the market, the stock price began to fall, The mind is paralyzed by fear. Their immediate response was to sell their shares, which instantly crystallized paper losses into a grim reality.
If they take a moment to realize that this is only a short-term event, if they remember the past history of the stock market, they may have remembered that only see the stock before the market has bounced back to Previously higher levels.
A worse situation is what happens most often, especially at the latest, when traders who use margin funds to invest in stocks and, for whatever reason, fail to meet margin requirements are forced to sell them Of the shares, whether they like it or not. They are still hurt today.
Another reason that is becoming more common is that greed plays a role in shareholders 'reaction to the company's announcement that they do not meet traders' profit expectations. Their attitude seems to be "your stuff!" We'll teach you a lesson, "They go to sell the company they hold sometimes at a loss
A good example is Leighton Holdings (LEI), which only announced its six-month profit until Friday, December 3, 2007.
Profit rose from $ 190.6 million to $ 257 million
Revenue increased from $ 5.7 billion to $ 6.56 billion
The reaction to this claim is that the stock was sold in the first 90 minutes of the transaction, down 17%, closing the trading light and the stock bouncing back to the intraday losses of 5.5% overall.
As for why, I do not have a clue. Clearly, a considerable number of traders, according to the number involved, are not satisfied with the results, and for any reason decided to sell the stock, leading to a substantial decline in stock prices.
I hope you can see what I get.No doubt, why is a trader who sells more than I do in this article? But in the end, each individual trader has a preconceived notion of what prices they want to sell and, most importantly, why they sell.