Article How The Power Of The Masses Drives The Market

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The incessant intraday struggle stock market between the bulls and the bears is what drives market rallies and precipitates market declines. Regardless of the style of analysis or system employed by traders, one primary aim of their trading endeavors is to understand the degree of control held by the bulls or bears at any given time and to predict who should hold power in the near to distant future. Unfortunately, traders’ natural desire to follow the crowds often gets in the way of seeing this clearly. Here we’ll take a look at how psychology and behavioral finance propel bull and bear markets.
The Force of Emotion One way to see the market is as a disorganized crowd of individuals whose sole common purpose is to ascertain the future mood of the market (the balance of power between bulls and bears) and thereby profit from a correct trading decision today. However, it’s important to realize that the crowd is comprised of a variety of individuals, each one prone to competing...

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