How I started Share Trading on the JSE... Awareness and Journey
"Never stop learning, it is a gift that will always reward you..." - Vernon Chalmers
“I have been investing in shares and trading derivatives for more than 20 years. In the beginning I invested through the traditional paper-based stockbroker system (up to the early 2000's) and after the introduction of online share trading I started trading via an online JSE-accredited and direct-linked trading platform.
It all started in the beginning of a semester lecturing my first Economics class during the mid-1990's when a student asked me to explain a particular 'financial theory of stock market investment decision-making and risk management' in more practical terms. That same afternoon I phoned a local stockbroker and placed an order for my first share trading transaction. For the rest of the year we analysed and tracked the company's share performance on the JSE.
It was a thorough hands-on learning experience with and through my students. I nostalgically retained the shares for many years as I curated and developed my first share portfolio.“ (Vernon Chalmers)
‘From Analytical Education to Creative Training’ – as published on my Mental Health and Motivation website.
Image: Copyright-free 'Technical Analysis' display (Pixabay)
Article Source: Mental Health and Motivation 'From Analytical Education to Creative Training'
Financial Fear and Greed Impact on Mental Health
Introduction:
In stock market investment and trading via Technical Analysis (TA) we [also] apply the guidance of the ‘Fear and Greed Index’ to assist in determining the ‘absolute - probable correct time’ to buy or sell a specific company's shares / derivatives. This is a psychological / financial human behaviour indicator in deciding when a share is overbought or oversold (collectively).
In stock market investment and trading via Technical Analysis (TA) we [also] apply the guidance of the ‘Fear and Greed Index’ to assist in determining the ‘absolute - probable correct time’ to buy or sell a specific company's shares / derivatives. This is a psychological / financial human behaviour indicator in deciding when a share is overbought or oversold (collectively).
Buying an oversold share / or selling an overbought share (in any transaction) could at times be challenging decisions and TA is only guidance (of various previous movements / transactions) to assist the trained and or experienced investor / trader.
Some of these decisions are at times executed too early, too late or not at all - which could lead to unexpected (leveraged) financial loss - especially for the inexperienced investor / trader.
Regular losses can add to high-functioning anxiety (and / or prolonged stress) should the share / derivate maintain its current position (against the original decision taken) - and not change as indicated or 'forecasted' during TA. Especially if it is a frequent occurrence (with various companies) / or when the market keeps on moving in the opposite direction for unexpected periods. Especially for the inexperienced shorter-term derivatives trader.
For minimising this risk we also use Fundamental Analysis (FA) where overall macro market, specific corporate / industry metrics and other strategic financial management measures of a company are evaluated in support of TA. FA information is freely available from any stock exchange listed company's website under Investment Relations (as prerequisite of a listed public company on any stock exchange i.e. JSE), various required publicly available corporate media releases and public financial analyst media reporting. Regular losses can add to high-functioning anxiety (and / or prolonged stress) should the share / derivate maintain its current position (against the original decision taken) - and not change as indicated or 'forecasted' during TA. Especially if it is a frequent occurrence (with various companies) / or when the market keeps on moving in the opposite direction for unexpected periods. Especially for the inexperienced shorter-term derivatives trader.
Fear leads to Greed / or Greed leads to Fear, hence a major reason or decision why a particular share is bought or sold - collectively wrt the TA at a specific time. The (perpetual) outcome of the collective market decision-making is dynamically replicated in real-time analytics.
This objective / quantitative data is an effective analytical indicator for evaluating the collective psychological sentiment of buyers / sellers (of a particular share / derivatives as it is bought / sold in real-time).
This efficient-market hypothesis (EMH) interpretation is based on the collective action (and share price) - note: there could be other underlying reasons why particular individuals / institutions are buying or selling a specific company's shares / derivatives at that particular time. The overall collective buying / selling statistics could be in the moment, day, week, month(s) or year(s) - depending on the applied investment / trading strategy at the time.
Considering application of EMH theory (with all available corporate / financial information factored in) the dynamic market / price statistics depicts the 'fear and greed' mind-set / sentiment of the median (average) of the market collective (at a particular day / time) who is buying or selling a particular company’s shares.
Proper TA (and FA) due diligence not only reduces the financial risk (in providing more up-to-date information) in investment / trading (derivatives) decision-making, but also offers insight(s) into a holistic approach towards the psychological (personal and or institutional buyers / sellers) financial decisions at a specific time. (Vernon Chalmers for the Mental Health and Motivation website)