Failure to understand the reason behind will make a difference in the end result
Since the Covid-19 pandemic stock market is in the spotlight. Everyone is involved in the market one way the other. Most people in the market have gained quite a handsome profit. The stocks in healthcare manufacturing and vaccine company has increased significantly. The stock market overall has increased in value due to government bailout to support the market.
Following the herd is dangerous. It is perhaps the most dangerous is when you have a winning trade that does not follow your strategy. When it comes to winning trade normally people will not analyze and the trader will become more complacent. They thought they have beat the market.
When the market is going up, as long as you get involved you will make money anyhow regardless of your knowledge. When the market is ranging and reverse that’s where the true test comes in and separates between the professional and amateur. Both traders look the same but the difference is their strategy and reasoning behind taking the trade. It is very difficult to judge by looking at their trade but only time will tell.
You can avoid falls into this trap by continue sharpening your knowledge and stay alert. This way you can keep your emotion stable and avoid making the wrong decision. The ultimate goal when it comes to trading or investing is to able to generate a consistent return from the market but not an overnight winner.