Trading Stocks Is Not Gambling
Despite being on the losing spree, the people might gamble more with the hope that they will win the next game. Even the sweet memories of the past victories force the people to play more. A recent study has revealed this trend. The authors of this study have published the outcome of this study in the Journal of Experimental Psychology. In this article, we would be looking at the interesting findings brought out by this interesting study.
The study found that people chose to go in for further plays when the scientists reminded or primed them of past winning outcomes. It has found that people were over 15% more likely to play more by selecting the risky option. The research team from the University for Warwick in Britain believe that memories of the people play a crucial role in making certain decisions. When the team interviewed people who are in the habit of gambling, they found that subtle cues about the past victories play a significant role in propelling them forward to gamble more.
This is clearer in people who go for gambling in local casinos. The gamblers even place millions of dollars in cash on the table for the final showdown in some poker tournaments with the hope that they would win in the next game.The researchers had come with the hypothesis that memory of winning outcomes in the past forced the people go for more gambling in casinos and risk lots of money on the table. The results of the study more or less confirm the roles these cues play in forcing the people to play more, risking their money. In order to cross check the hypothesis, the researchers manipulated the memory of the participants for past winning outcomes with simple risky choice tasks. The researchers achieved this by asking the participants to select one of the two doors as part of a computer test.
The authors of the study gave the participants the choice of four coloured doors to select from. Three of the doors always led to guaranteed outcomes (0, 40 or 80). On the other hand, the fourth door led to a risky 50/50 outcome that carried 20 or 60 points. Later in the study, the team members reminded the participants about their past winning or losing outcome based on the points that they got, depending upon the door they opened. When the team members told the participants about the points they had got, they tended to go towards the risky door more often.
Trading stocks is difficult and we all know there are ups and downs, but it should not be treated as gambling. Gambling is also known as hoping, so if you catch yourself “hoping” that you shares of stock will be worth more tomorrow than they are today then it’s the first sign that you’re gambling instead of trading stocks.
Are they over-valued or under-valued compared to their actual net worth?
What are their plans over the next year, 5 years and 10 years?
Who is the owner, or CEO? Mark Zuckerburg cares more about his company than the amount of money he makes. Others may be more apt to put giant bonuses in their pockets.
6. Pick a follower. Warren Buffett has a long history of great decisions. You can look at the companies he’s bound to and choose to purchase those shares.
Doing research on the company will allow you to make better decisions. If you’re hoping for a jackpot winner then go to the nearest casino. If you’re looking for a million dollar winner in a single day then play the lottery. However, if you’re looking to make 10-15% per year on your money, buy solid companies that are performing today and planning to perform over the next 5 years.
Jumping into a stock because it’s hyped up in the news. If you’re reading the news online you’ve already missed the jump in price.
Getting บาคาร่า mad because your stock didn’t increase in an hour or a single day.
Not telling your friends or family members because you think they would disagree with the penny stock you purchased.
Riding stocks to the end. Have you ever bought a stock that dropped 5 days in a row, then 10 days in a row, and you held it the whole way? You might think that it’s going to turn around, but it may not. Get out while you can. Smart traders tell you to always pick a number. If you buy a stock at $5.00 you can set it to automatically sell if the stock drops $1.00 or 5% or 10%, your choice. That way your crazy thoughts won’t alter your smart decisions.
First things first, stop saying “trading stocks” or “day trading”, and start saying . If you buy shares of GOOG you are a part owner of Google. If Google’s sales increase your stock increases. If good news comes out on Google your stock increases, and so on.
Are they going to be around in 10 years like GE, IBM and Microsoft? Or are they too new to judge like Facebook, Twitter and YouTube? Facebook replaced MySpace, so another company could possibly replace Facebook. That’s one risk in the negative column before I decide to buy FB or not.