Psychology plays a major part in the trading success. Among all, greed and fear are the main determinants in the success or failure of a trade. I would cover these factors details in my future post. Another hurdle is the confirmation bias, the tendency of people to seek evidence in confirming an already held opinion.
For example, you came across an Internet news that a new oilfield is discovered by Company A, that would bring a significant profit to the company. This news attracted your attention, and you went on to google all related news, and think that the shares of Company A will rise. Worried that you would miss this boat, you quickly logged into your Internet broker and made the purchases. Without analyzing the company properly, in term of their financial and technical trend, you might make a wrong entry and suffer loss. This usually happens in amateur traders.
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