A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits

Behavioral Psychology and the Market

The principles of technical analysis are based in logic and study, in statistical and realistic assessment of price strength and weakness—in other words, in the attributes of trends and the ways in which they proceed or stop. Opposing this methodical approach to analysis is the overriding emotional and often irrational behavior of investors and traders. Too often, the emotional responses, notably greed in bull markets and panic in bear markets, mask even the most obvious responses that should prevail but that do not. At times of extremes in price movement in the overall market, rational analysis is easily ignored as market participants rush to join the majority. Even when that majority has been shown time ...